Business

Booming real-estate feared to cause more harm than good

SGGP

Housing projects for residential and touristic use are growing at a breakneck speed, not only in HCMC and its outskirts but even in more remote districts.  Nevertheless, whether this movement is actually profitable or harmful to the economy is open to question.

Billboard for an apartment complex to be built on land with incomplete infrastructure

Billboard for an apartment complex to be built on land with incomplete infrastructure

According to Long An Department of Construction, as of April 2019 there had been 118 residential projects covering 2,502ha, mostly located in Duc Hoa District, an adjacent area to HCMC.
Rapid urbanization is also taking place almost everywhere in Can Giuoc District of Long An Province for the past few years, with an abundance of new heavily funded housing projects accompanied by flamboyant promotions.
What most investors fail to take into account, however, is that people’s current demands are nowhere near the level they had anticipated.
Census results released in 2019 showed that the population of Long An Province had only grown from 1.4 million to 1.6 million within the 2009-2019 period. The development speed of houses obviously outgrew the population growth rate.
Although many projects have enjoyed full-fledged transportation and urban infrastructure for long, the area population is sparse, leading to abandoned lands and large deserted buildings.
To add more to the drama, real-estate agencies for one of these projects received warnings from the authority due to the projects’ lack of legal permissions.
In another development, while condotel projects have been approved of left and right, in reality the term and definition of “condotel” are not laid out in any legal documents. As a results, land use and house use rights cannot be granted to potential buyers and the already built complexes are being left empty.
Commenting on the issue, Chairman of HCMC Real Estate Association (HoREA) Le Hoang Chau believed that the outburst of real-estate investment in HCMC outskirts is due to people’ anticipation of economic growth from those areas in the near future.
Binh Duong and Long An Provinces are among the Southeast area’s investment magnets, expected to share the immigrant burden with HCMC by providing housing for settlers, although their regional development is still far from ideal.
From an economic perspective, investors mainly rush to purchase land from areas that are within the State’s scheme for infrastructure development in order to resell them at much higher prices when those constructions have been carried out, said Dr. Dinh The Hien.
Such hasty decisions led to a wave of “surfing investments” that only creates imbalance between real-estate and national economic growth and will likely lead to negative consequences for the economy.

Other news