Land
prices in Hanoi and HCM City are equivalent to 80 years of rental costs, the
World Bank has said.
The World Bank (WB) said in its recent report
on Vietnam's urbanisation that with such high prices, only five per cent of
Hanoi's population could afford to buy land.
Dean Cira, WB's Lead Specialist and Urban
Sector co-ordinator, said the situation indicated the huge disparity between
the government's stipulated prices and market realities.
Real prices are often up by 10 times higher
than official prices.
Such a two-price system brings huge profits to
real estate developers, investors, and brokers while seriously harming
interests of landlords and end-users, Cira emphasized.
In addition, the processes of land allocation,
settling of cooperation contracts, tax calculations, trading and licensing for
real estate developers and investors are often based on seriously distorted
prices, which are much lower than their transaction prices, creating a huge
deficit to the state budget, the specialist noted.
Improper land pricing has fostered the fast
development of real estate services, adding to incoherent rapid urban expansion
and low-quality infrastructure.
According to the WB's report, real estate
prices in Hanoi and HCM City are much higher than those in several Asian
cities. Land prices are nearly 1,000 times higher than monthly rental prices
for the same location.
Exorbitant land prices often lead to high
leasing fees and higher sales prices in future transactions to help investors
quickly recoup their initial investment.
Former director of the Ministry of Natural
Resources and Environment's general Department of Land Administration, Ton Gia
Huyen attributed the high land prices to improper mechanisms and lax
management.
He noted that many people earning money easily
has added to real estate speculation and market manipulation.
Under the national master plan for
urbanisation, Vietnam's urbanisation rate will reach around 38 per cent by
2015. This means that the country will have over 870 urban areas of different
sizes during the period, an increase of 125 from the current number.
Phan Thi My Linh, head of the Ministry of
Construction's Urban Development Agency, said that the rapid rate of
urbanisation was outstripping local government control.
Dtinews
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