'Beware of oversupply in the real estate market'

​"Recently, there has been a very strong investment in urban areas, therefore extreme caution is needed because it is closely linked to real estate. If not strictly managed, there will be a real estate bubble and an oversupply." This warning was issued by Deputy Prime Minister Trinh Dinh Dung.

The Cua Lo Town high-end hotel and villa complex project has been halted for many years after the rough construction was completed. (Illustrative photo by Xuan Hoang)

Tight control over the real estate market.

At the Ministry of Construction's 2016 year-end review conference, in addition to commending some of the achievements and efforts of the construction industry, the Deputy Prime Minister also pointed out a number of limitations and shortcomings of the industry and requested that they be addressed to the maximum extent possible in 2011.

According to the Deputy Prime Minister, the real estate market is currently showing signs of a supply-demand imbalance, with this trend increasing. Developers are focusing on developing mid-range and high-priced properties, while low-cost housing and social housing are receiving less investment, especially in urban areas.

Given this reality, the Deputy Prime Minister instructed the construction industry to focus on managing and guiding market development according to the needs of the people and the economy, not developing real estate at any cost to create products that no one buys or that are far beyond people's ability to pay. The development of social housing must be considered a priority.

The Deputy Prime Minister requested the Ministry of Construction to persistently implement 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 zones (which is currently in short supply), housing for the rural poor, and housing for people with meritorious service...

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

In particular, urban management still faces many challenges, and there is a significant lack of a leading figure, a conductor or foreman, in the field of urban management.

The Deputy Prime Minister argued that without strict management, a real estate bubble and oversupply could occur.

According to the Deputy Prime Minister, in 2017 and the coming years, the Ministry of Construction must improve the institutional framework and closely coordinate with ministries, sectors, and localities to review all construction plans, update and create new plans, and concretize plans based on the actual situation, 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 major cities to develop comprehensive solutions to overcome traffic congestion.

"Solving traffic congestion isn't just about investing heavily in infrastructure and controlling traffic effectively. The more we invest in Hanoi and Ho Chi Minh City, the more attractive these cities will become, thus attracting more population due to migration from neighboring localities," the Deputy Prime Minister said.

According to the Deputy Prime Minister, it is necessary to comprehensively plan the national urban system, coordinating with well-developed localities in the region to create more attractive cities, generate more jobs in those cities, and thereby reduce the migration of people to central urban areas.

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

The planning reveals many loopholes.

Acknowledging the Deputy Prime Minister's assessments, Minister of Construction Pham Hong Ha stated that urban planning in major cities like Hanoi and Ho Chi Minh City has revealed many loopholes and shortcomings in recent years.

The Minister emphasized that poor planning will lead to many negative consequences. Urbanization is an inevitable process in many countries. However, if the management agencies do not plan well, ensure adequate transportation infrastructure, and protect the environment, they will pay a heavy price.

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

Regarding the issue of reducing inner-city traffic congestion by relocating factories, schools, hospitals, and ministerial headquarters to the outskirts, Minister Ha expressed concerns about its implementation: “We need to study this plan more deeply to see if there are any conflicts. Moving schools and hospitals to the outskirts would mean people would still have to commute from their homes to these locations. If we can't resolve these conflicts, we won't be able to solve the problem,” Minister Ha stated.

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

According to Bao Anh/vneconomy