'Be careful of real estate oversupply'

​“Recently, there has been a very strong investment in urban areas, so we must be very careful because it is closely linked to real estate. If not strictly managed, there will be a real estate bubble and excess supply.” That is the warning given by Deputy Prime Minister Trinh Dinh Dung.

The Cua Lo Town Complex of Tourist Hotels and Luxury Apartment Villas has been stopped for many years after completing the rough construction. Illustrative photo (Xuan Hoang)

Tight control of real estate market

At the 2016 year-end conference of the Ministry of Construction, in addition to praising some results and efforts of the construction industry, the Deputy Prime Minister also pointed out many limitations and shortcomings of the industry and required them to be overcome to the maximum in 2011.

According to the Deputy Prime Minister, the real estate market is currently showing signs of supply-demand imbalance, with the trend increasing. Investors are focusing on developing products with average and high prices, while low-cost housing and social housing are receiving little investment attention, especially in urban areas.

With that reality, the Deputy Prime Minister directed the construction industry to focus on managing and directing the market to develop according to the needs of the people and the economy, not to develop real estate at any price to create products that have no buyers or are far beyond the people's ability to pay. Social housing development must be considered the focus.

The Deputy Prime Minister requested the Ministry of Construction to persevere with solutions to control the real estate market.

In 2017, the Ministry of Construction needs to focus on developing social housing, including urban social housing, housing for workers in industrial parks, which is currently in great shortage; housing for the poor in rural areas, for people with meritorious services, etc.

In addition, the Deputy Prime Minister also pointed out shortcomings in construction safety, project quality, and fire and explosion issues. Waste and loss still occur in many projects, causing real estate prices to increase.

In particular, urban management is still confusing, in which there is still a lack of a conductor and a foreman in the field of urban management.

The Deputy Prime Minister said that if not strictly managed, there will be a real estate bubble and excess supply.

According to the Deputy Prime Minister, in 2017 and the coming years, the Ministry of Construction must perfect its institutions, closely coordinate with ministries, branches and localities to review all construction plans, update and establish new plans, and concretize plans based on practical situations, future forecasts and market demand.

The Deputy Prime Minister also requested the Ministry of Construction to focus on directing and coordinating with the authorities of large cities to find synchronous solutions to overcome traffic congestion.

“Solving traffic congestion is not just about investing heavily in infrastructure and controlling traffic well. The more we invest heavily in Hanoi and Ho Chi Minh City, the more attractive these cities will become, and therefore, the more concentrated the population will be due to migration from neighboring localities,” said the Deputy Prime Minister.

According to the Deputy Prime Minister, it is necessary to calculate the national urban system comprehensively, how to coordinate localities with good development in the region, create more attractive urban areas, create more jobs in those urban areas, thereby limiting the flow of people moving to central urban areas.

For Hanoi and Ho Chi Minh City, in addition to investing in upgrading infrastructure, it is necessary to develop satellite urban areas with good traffic connections, suitable to the needs of the people.

Planning reveals many loopholes

Acknowledging the Deputy Prime Minister's assessment, Minister of Construction Pham Hong Ha said that recent planning in large cities such as Hanoi and Ho Chi Minh City has revealed many loopholes and shortcomings.

The Minister emphasized that poor planning will lead to many consequences. Urbanization is an inevitable process in many countries. However, if the management agency does not calculate good planning and ensure adequate transport infrastructure, environmental protection will have to pay a high price.

“Urban development requires resources. Our resources are limited. We have to choose what to do first to avoid paying the price,” said Mr. Ha.

Regarding the issue of reducing inner-city congestion by moving factories, schools, hospitals, and ministry headquarters to the suburbs, Minister Ha was concerned about the implementation: “We must study this plan more deeply to see if there are any conflicts. Moving schools and hospitals out, but people still have to travel from home to there. If the conflicts are not resolved, the problem will not be solved,” said Minister Ha.

Reporting at the conference, Director of the Department of Housing and Real Estate Market Management Nguyen Trong Ninh said that in 2017, this agency will organize inspections of a number of large real estate and housing projects nationwide.

According to Bao Anh/vneconomy