Hanoi Secretary worries about hundreds of "dead" real estate projects

"The whole country currently has no idea how many real estate projects are dead. Hanoi also has a lot, with 712 projects that have been delayed for many years. Recently, a plan was issued to cancel more than 100 projects, collect them for bidding, and auction several thousand hectares," Hanoi Party Secretary Dinh Tien Dung cited data at the National Assembly's group meeting discussing socio-economic issues on the morning of October 24.

According to Mr. Dung, many projects have been dormant for 10-20 years, causing public frustration and becoming a hot spot for insecurity and disorder. Unblocking the real estate market will create a huge ripple effect, promoting growth in many industries; stabilizing the macro economy; bank credit, corporate bonds; and employment.

However, the Government has proposed many solutions but "the actual effectiveness is still limited". Businesses have asked and asked but still do not know what to do.

Mr. Dinh Tien Dung suggested that the Government look at the reality of the whole country with stalled projects. If we follow the current thinking and current laws, according to him, the projects are wrong. In the past, projects were not bid or auctioned, they only called for investment in land allocation. Enterprises cleared the land for infrastructure and then stopped. But now, according to him, "leaving it there is a waste of resources, but continuing to implement it is a legal risk".

Here, Mr. Dung said that the main problems are the Land Law and the Investment Law. He recommended that the National Assembly direct and issue a policy for a comprehensive review and a resolution to resolve the issue because this authority is beyond the Government's decision-making power.

Regarding projects that are slow to be implemented, the Hanoi Secretary said that it is necessary to calculate the land price correctly and fully, in accordance with current regulations and the market. "Any investors who are no longer capable must be resolved immediately," he said.

Thua Thien Hue Provincial Party Secretary Le Truong Luu agreed and pointed out the fact that budget revenue from land in all localities has decreased due to the stagnant real estate market. Regarding the cause, he said that there was a period when the market developed a "bubble", prices were pushed up, and purchasing power mainly came from bank loans. When banks tightened credit, purchasing power immediately decreased.

According to Mr. Luu, the mechanisms and policies in the real estate sector are very complicated, there are things that the local authorities "ask for forever but no one answers". For example, the transition from the 2003 Land Law to 2013, some previous projects were allocated land through administrative procedures, and investors were selected through bidding.

"But through the 2013 Land Law, it requires land prices to be calculated at the time of land allocation. So for previous projects that have already paid, when the red book is issued, what price will be calculated?", Mr. Luu raised the issue.

Second, some real estate projects with violations have been handled, and individual criminal liability has been considered, but now it is unclear how to proceed. The Government's working group has worked with some localities to resolve the issue. However, he suggested that the Government develop a common mechanism to handle localities equally.

"Investors also poured in a large amount of money into these projects, and people also invested a lot of assets. Now they can't handle it. If there were procedural errors and the auction wasn't successful, can it be done now? Is there a way to handle it, collect the difference in land use fees, and reduce losses for the State?" he said.

Standing Deputy Secretary of Binh Dinh Provincial Party Committee Le Kim Toan said the real estate market has "formed new prices, anchored very high". And in Vietnam, whenever that happens, if there are measures to intervene to lower prices "there will be problems immediately".

He said that high prices make it difficult for people to access housing, segments are not competitive, and do not attract buyers. Mr. Toan proposed a solution to balance the segments of the market, how to make housing prices suitable for the purchasing power of the majority of people. Then the real estate market will stabilize.