Vietnam – Ways sought to make condos affordable to buyers

HANOI – Knowing that the property market is facing troubles now, the Ministry of Construction has allowed property project owners to change use purposes of their projects. 

Of the measures to support the market, adjusting down the apartment sizes was discussed at a meeting among the construction ministry, the Hanoi City government, relevant agencies and property firms in Hanoi last Thursday.

Reducing apartment sizes

Minister of Construction Trinh Dinh Dung said the projects that had not carried out site clearance or those yet to start work on infrastructure, if not essential, would be cancelled or suspended.

As for completed projects and those under development, owners can raise the percentage of low-cost houses. They are even allowed to turn high-grade condos into low-cost ones, said Dung.

He explained owners of commercial housing projects must pay land use fees, but they would not have to do so if developing low-cost housing projects.

To deal with unsold apartments, the minister suggested enterprises revise down apartment sizes to offer customers affordable products.

However, this suggestion aroused concerns among management agencies and enterprises.

Nguyen Van Hai, director of the Hanoi Department of Planning and Architecture, said changing use purposes or decreasing apartment sizes would breach regulations on fire prevention, safety and construction density.

For example, one elevator can only serve people living in 4-6 apartments, but when the sizes are reduced, the number of apartments could reach 10-12, making the elevator overloaded. Moreover, adjusting down apartment sizes would go against the planning for technical and social infrastructure, Hai said.

Nguyen Ngoc Thanh, general director of Haiphong Construction and Development Investment Joint Stock Corporation, said there had been no regulation concerning temporary change of project use purposes. Therefore, adjustments should be transparent.

Pressure from discounted products

In the current tough times, many enterprises have been taking many measures to improve the market liquidity, including offering discounts. However, several project owners suggested there should be sanctions against apartment dumping.

In the northern region, the Dai Thanh apartment project has slashed price from VND14 million to VND10 million per square meter, catching the market’s attention with the project owner’s statement that the new price is still profitable.

Following this move of Dai Thanh, many other investors have cut prices or offered more promotions to lure homebuyers. However, several businesses described such a move as “not fair.”

In a discussion on the property market outlook for 2013, Nguyen Quoc Hiep, chairman cum CEO of Global Petroleum Investment Corporation (GP Invest), said the average investment cost of an apartment was some 8-8.5 million per square meter. With land use fees and unofficial costs included, the price of each square meter should be VND13-14 million, he said.

“I’m really discontent with the statement the price of VND10 million per square meter is still profitable,” he stressed.

Doan Chau Phong, deputy general director of Vinaconex, said apartment dumping in a bid to quickly withdraw from the playground made the market remain dull, affecting other project owners. Moreover, reducing prices of commercial condos to below prices of low-cost houses will hinder investment in the low-cost segment.

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