Red tape to continue to act as a drag on HCM City apartment supply

 

An apartment building in HCM City. Apartment supply is expected to fall in the last quarter of the year. — VNA/VNS Photo

In the third quarter 13,853 units in eight projects entered the market, 5.4 times the number in the preceding quarter, but with 10,346 units at just one of them: Vingroup's Vinhomes Grand Park in District 9.

This is also the reason for supply in the eastern part of the city to increase sharply (accounting for 76 per cent of the market) and the mid-end segment (accounting for 89 per cent of the supply) in the third quarter.

But most real estate developers do not have any new projects in the pipeline.

Nguyễn Hoàng, director of DKRA Vietnam’s R&D Division, said the sharp drop in the number of launches is mainly due to the prolonged approval process, and those launching now had sought licences long ago.

A recent report by the HCM City Real Estate Association said only 12 housing projects received approval in the first nine months of this year, a year-on-year decline of 72 per cent, with licensing delayed by conflicting provisions in the various laws regulating the sector.

If the government does not resolve them, the low supply could persist for years, and banks would have trouble recovering loans they have given to real estate businesses, the association said, adding some real estate businesses are facing bankruptcy.

Hoàng said in the fourth quarter demand is also expected to decrease because mortgage terms are becoming difficult and interest rates are showing signs of increasing.

Besides, buying property to lease out is becoming less profitable, he added. — VNS