Ailing property market seeks cure

The Phu My Hung Urban Area in HCM CIty. Prime Minister Nguyen Tan Dung yesterday advised the city to restructure the real estate sector to eliminate ineffective players and provide housing that meets real demand. — VNA/VNS Photo Van Khanh

HCM CITY — Prime Minister Nguyen Tan Dung yesterday advised HCM City to restructure the real estate sector towards removing weak and ineffective players and providing housing to meet real demand.

He gave the advice while attending a working session with the City authorities to discuss solutions for solving problems in the real estate market and tackling the banking bad debt crisis.

The session was attended by Deputy PMs Vu Van Ninh and Hoang Trung Hai as well as leaders of related ministries.

Reports prepared by the Ministry of Construction and the city People's Committee said the real estate market crisis has assumed critical importance, having been frozen for the last two years. This had affected production and trade in other sectors, including cement, steel and other construction materials, the reports said.

The meeting heard that HCM City at present has 15,000 apartments unsold and an area of at least 15,000sq.m in apartments for rent that is vacant. It has 300 real estate projects occupying 3,100ha of land that have been delayed.

Banks have loaned VND85 trillion ($4 billion) to real estate projects in the city, including VND4 trillion ($192 million) in bad debt, the meeting heard.

Leaders of ministries attending the working session said that the problems were caused by unplanned development of the city real estate market.

Many investors lacked financial capacity and professional knowledge of real estate projects and had entered the sector following a popular trend, they said.

Nguyen Huu Tin, deputy chairman of the city People's Committee asked the Government to form a national steering committee that would carry out comprehensive research on problems facing the real estate market including bad debts with a view to addressing current problems and developing long-term strategies.

Tin also asked the State Bank to support investors as also offer credit to consumers to buy properties.

Ministry leaders agreed with a recommendation made by deputy head of the HCM City National Assembly delegation, Dr Tran Du Lich, that the difficulties of the real estate market should be addressed systematically. They said this would help rescue other sectors and allow the revival of production.

Construction Minister Trinh Dinh Dung said HCM City should review all real estate projects in the city and must halt those that are not part of official plans.

He said housing development has to focus on social housing and creating an open mechanism for residents so that they can afford to buy their own homes.

He said commercial housing projects that had received land but were delayed can be switched to social housing projects so as to increase the availability of properties for workers and other needy population segments.

The ministry also suggested that the Government asks commercial banks to provide more credit to the real estate market, focusing on on-going projects that have the capacity to repay loans.

Governor Nguyen Van Binh agreed with the ministry, saying the State Bank was ready to provide loans, according top priority to residents that are in real need of housing.

The bank would direct commercial banks to focus on dealing with bad debts in the real estate businesses, he said.

Deputy PM Vu Van Ninh asked related ministries and the city to develop a long-term vision for planning and investment, as well as strategic policies for the real estate market with credit and tax incentives.

Concluding the working session, PM Dung said the Government recognized the impacts of economic crisis in bad debts, stockpiles of unsold goods and the frozen real estate market.

He said solving these problems would ensure sustainable development of the economy. He asked concerned ministries to come up with a comprehensive plan to deal with bad debts while decreasing interest rates, controlling inflation and balancing the macro economy.

He also directed the ministries to work closely with the city and devise detailed strategies for land use planning, giving top priority to housing for low-income residents, students and workers.

At the same time, the ministries have to review regulations on real estate trading, complete the legal framework on urban and housing development, ensuring that it is in line with market needs and capacity of the economy.

The PM ordered the city to stop projects that are not part of approved plans, have not secured site clearance and do not meet real demand. The city must strengthen the compliance with laws regarding land use, investment, housing development and real estate trading, and strictly deal with the violations, he said.

He also asked the city to restructure the real estate sector, eliminating players that have weak financial capacity and lack conditions to develop strongly.

The PM said commercial banks should focus strongly on dealing with bad debts related to real estate projects by restructuring loans, setting up contingency funds to deal with risk, and devise ways and means to assist revival of the real estate market.

Dung also said these issues would be discussed further at the monthly working session of the Government later this month towards issuing a resolution for dealing with problems in the real estate market. — VNS