Ministry urges cuts to real estate projects

HA NOI (VNS) — About 30-40 per cent of real estate projects should be closed to ensure a balance between supply and demand, according to the Ministry of Construction.

The ministry said that cutting real estate projects would reduce inventories and prevent land from being wasted after unfinished projects had left the land fallow.

Deputy Minister Nguyen Tran Nam said that many developers did not have the resources to complete their projects.

“Even if they did have the finances to implement the projects, the demand simply isn’t there,” he added.

In Ha Noi alone, there are 720 licensed projects covering a total area of more than 300,000 hectares. It’s estimated that these could satisfy demand until 2050.

The figures were alarming given the declining market and difficulties people were facing accessing credit, the ministry said, adding that without proper management, a scenario of a city full of unfinished projects could happen.

Nam said that allowing localities to decide which projects to cancel would cause problems because during the real estate boom, many of them had teamed up with enterprises on development projects, causing a conflict of interests.

Most localities proposed to revoke licences from just a few per cent of projects, rather than the 30-40 per cent that is needed to find a balance.

The ministry plans to set up a group in charge of checking, stopping and revoking real estate licences nationwide.

One expert said that the issue wasn’t pressing because in the medium term, the market would not be flooded as investors were encountering cash flow difficulties.

He recommended simplifying procedures while allowing the construction of affordable housing for low income earners in order to reduce inventories. — VNS