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The noteworthy events in real estate market in 2011
The year 2011 witnesses the dark days in the history of the real estate market. Real estate developers cannot borrow capital to develop projects, while the real estate prices have been decreasing dramatically.
1. The “land fever” in Soc Son, Dong Anh districts in Hanoi
The fever attack occurred in early 2011. The story began when the Ministry of Education and Training released a dispatch saying that 12 schools had to relocate to the suburbs, including the 7 satellite areas such as Gia Lam (250 hectares), Soc Son (600 hectares) and Son Tay (300 hectares).
The information prompted speculators to rush to buy land in Soc Son district, which then pushed the land prices up. A lot of land plots became three times more expensive than in 2010. The land fever was then spread out to Dong Anh district.
However, after that, the land prices in the areas have dropped dramatically, leaving speculators in big losses.
2. “Abandoned” villas have not been settled
The Ministry of Construction, after examining 18 projects of 11 investors in Hanoi, found out that more than 30 percent of villas had not been into use.
The Hanoi People’s Committee released a legal document requesting to settle the abandoned villas, and impose the tax of 5-10 percent depending on different types of apartments. However, a lot of apartments have still been left idle.
Vu Xuan Thien from the Ministry of Construction said that the problem can be settled by the law on non-agricultural land taxation, but the tax law will only valid as of January 1, 2012.
3. Hanoi development program made public
The overall urban programming of Hanoi until 2030 with the vision until 2050 was approved by the Prime Minister in July 2011. The decision of the government which came out at the time when the Hanoi real estate market fell into big difficulties and was hoped to help revive the market.
However, the long term development program has not had big impacts on the market in short term as previously expected.
4. Vietnam tightens real estate credit
In order to implement the Government’s Resolution No 11 on the measures to curb inflation, the State Bank of Vietnam instructed commercial banks to restrict the lending to non-production sectors, including real estate and securities.
With the policy on tightening credit, both real estate developers and customers have been facing big difficulties. The former cannot borrow money to develop projects, while the latter cannot borrow money to buy houses and apartments. A lot of investors have to bargain away their projects because they cannot arrange money to complete them.
5. The infamous default cases
The frozen real estate market with very weak demand, plus the overly high lending interest rates both have led to a lot of default cases.
Hanoians have heard about the 500 billion dong default case in Cau Giay district, and the 300 billion dong case in Dan Phuong District. Most recently, people have heard that the investor in Bac Ninh province cannot pay the debt of up to trillions of dong. The noteworthy thing is that all the debtors are the “big guys” in the real estate sector.
6. The “sale off” wave
The wave was kicked off in October when the price of the apartments at Petro Vietnam Landmark project in district 2 of HCM City was lowered from 21.22 million dong per square meter to 15 million dong. The move was followed by Saigon Mekong which slashed the sale price from 20 million dong to 14.5 million dong per square meter for its An Tien project’s apartments.
Especially, buyers just have to pay 30 percent of the total values to move in, while the remaining money can be paid within 15 years. This is considered the biggest sale off wave so far.
7. The hot issues of apartment blocs
Local newspapers reported about the serious problems with the ceiling of an apartment on the 20th floor of the Quoc Cuong Gia Lai apartment bloc in district 7 of HCM City, and the lift accident which killed one person at CT3 Yen Hoa residential quarter, which has raised worries about the safety of apartments.
Most recently, local residents of the Keangnam building on Pham Hung road of Cau Giay district, reportedly could not enter their apartments because the building management board stopped the lift services.
vietnamnet
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