A view of Phu My Hung Urban Area in HCM City. Last year, construction and real estate sectors contributed 17.4 per cent to the city's GDP.

HCM CITY  (VNS) — Poor master planning and cumbersome policies have limited the sustainable development of HCM City's real estate market, delegates heard at a recent conference organised by the city's Construction Department.

"The real estate market has played an important role in the economy and has promoted growth of related markets," Tran Trong Tuan, director of the Construction Department, said.

Tuan spoke at a conference on development trends of the HCM City property market for the next five years.

Last year, construction and real estate sectors contributed 17.4 per cent to the city's GDP.

For the last 10 years, the average area for housing has significantly increased from 10.3 – 17.3 sq.m per person each year and the number of enterprises has jumped four times, from 1,264 to 4,750.

"However, the market has showed many limitations and instability, shifting from overheated to frozen," he added.

There has been oversupply at times, few low-income apartment buildings, a shortage of rental apartment buildings, and delays in construction caused by weak companies.

"There are two many problems in housing management and development," Dr. Pham Thai Son, deputy head of research, was quoted as saying in the Sai Gon Giai Phong (Liberated Sai Gon) newspaper.

He pointed out that most housing projects were being built in outlying areas, and the time for asking permission took too long, from 464 to 605 working days.

"The long time for getting permission has led to a complicated management situation, and many projects have failed," he added.

In 2013, only 85 projects were withdrawn, but the figure doubled to 162 in 2014, and by the end of August it was 198.

Son also said only 210 of 1,220 housing projects would be linked with the metro system in the future.

"The low proportion could lead to an inefficient metro system," he said.

A lack of transparency and unstable development have also been other weak points of the market.

According to a yearly report from John Lang LaSalle company, Viet Nam ranks 68th in the global real estate market.

The situation had led speculation, with 20 – 50 per cent of housing buyers purchasing property at different stages of development.

A huge number of apartments are now available, reflecting the big gap between demand and supply. This was the aftermath of the lack of transparent development.

"In the near future, there will be more than 330,000 apartments available, and it will be a challenge for the city to develop the market if they can not balance supply and demand," Son added.

Le Hoang Chau, chairman of HCM City's Real Estate Association, suggested that to prepare for free trade agreements and the Tran-Pacific Partnership, "administrative procedures must reform to meet real situation".

He said that a project took at least three years to receive permission, and others take 10 years or more.

Le Huynh Cuong Nghi, general director of Nam Long Apartment Development Joint Stock Company, asked the city's real estate market to follow international regulations as Viet Nam integrates into the global economy.

"Laws should recognise expenditures like research and development for the land fund and after-sale management costs as proper expenses," he said.

"A national-level housing development management office should be set up to connect supply and demand at the national level, connect different resources to develop a housing market, and issue a national housing and real estate market development policy," he said.

To cope with all problems, the deputy chairman of HCM City People's Committee Nguyen Thanh Tai said: "All development in HCM City, including real estate and housing market, must be included in regional development plans of seven neighbouring provinces." — VNS