Pham Sy Liem, vice president of the Viet Nam Construction Federation, speaks to the newspaper Ha Noi Moi (New Ha Noi) about the need to restructure the real-estate market.
How do you respond to a report saying that the real estate market in Ha Noi and HCM City is warming up?
When we talk about the real estate, the first thing we have to talk is its location. Housing projects located in good locations are often "hot" while those located in other localities remain "cold".
I believe the property market will gradually recover as the country's economy gets better. This is reflected in the high end apartments being built in Ha Noi and HCM City.
The sales of average or cheap apartments located in good positions are also said to be on the rise. It is a paradox that the demand for low-income apartments in good positions is high, yet the supply is limited. So we should be careful with the rumour that the real estate in Ha Noi and Ho Chi Minh City has become hot again these days.
Is the real-estate bubble likely to return to the two main cities?
The property market in Viet Nam has not been professional. There are various reasons for this. For example, some people have taken abuse of the market's lack of transparency and accountability for their own benefit.
Many real-estate investors borrowed money from the banks and when the market became stale, they became debtors and were not able to pay the money back. The blow was finally felt by the banks as bad debts kept accumulating at an alarming level.
Do you agree that the disbursement of Government's low interest VND30 trillion ($1.41 billion) loan package for home buyers and property developers has been implemented at snail speed?
The project has been implemented for almost two of its three year tenure. However, so far, just one third of the budget has been disbursed.
There are various factors leading to the slow disbursement, including the lack of experiences from policy makers, the fact that bankers face cumbersome procedures to lend the money, that investors don't have the money to start projects - and that land allocated to these projects are not in good locations.
No home buyer wants to buy an apartment or house far from the city centre, especially if the infrastructure is poor. In addition, low income earners don't want to borrow money from banks to invest in houses which exist only on paper. All they want is "real – money – real-estate".
In your opinion what measures could help warm up the real estate market?
Lessons learned from the past few years are good for real-estate investors, particularly the lesson about supply and demand. I suggest from now on, investors wanting to build new towns should think how to turn them into multi-functional areas where residents can live, work or do business while their children attend nearby schools.
Recently, the National Assembly revised the Law on Housing, allowing foreigners to own their homes. Do you think this amendment will make the real-estate market more active?
I highly appreciate the change in the law. It is a development catalyst for the real-estate market. But, we should not consider it as a leverage for sudden growth in high-end apartments. The reason is simple, as most potential buyers work in areas where FDI projects are located. Further more, not many want to buy a home, particularly those who stay only for short periods.
For foreigners who are retirees or Viet Kieu – Overseas Vietnamese who want to settle in Viet Nam - the new policy will enable them to own a home.
Don't you think it is high time for Viet Nam to restructure the real estate market?
Restructuring the real estate market is an urgent need. It should have done some years ago.
We should restructure the market along diverse lines, but with the emphasis on houses for lease and houses for sale to average- income earners. Of course, the Government should support home buyers through soft loans and give preferential policies to investors, including low land-lease prices or reductions in the Value Added Tax. — VNS