Legal hitches stall $3 bln worth of real estate projects in Vietnam

Thousands of real estate projects across Vietnam, worth over $3 billion, have been stalled by legal hitches, says Nguyen Van Dinh, chairman of the Vietnam Association of Realtors (VARS).

He said at a conference Thursday that this situation has been affecting many real estate firms and projects over the last five years.

Thousands of projects have come to a standstill due to legal and institutional hurdles, which has, in turn, impacted related sectors such as construction materials, furniture and electronics, he added.

Developers and buyers were hoping to benefit from the new laws on land, housing and real estate business that took effect August 1, Dinh said. He hoped that the government would enact guiding documents soon for the laws to be enforced.

Dinh blamed the influence of vested groups amidst scarce supply for the recent abrupt rise in apartment prices, especially in Hanoi and Ho Chi Minh City.

There have been few newly licensed projects in recent years, and most available projects are either old or have been bought and sold multiple times, Dinh said. "There is a serious inadequacy in the supply of apartments, particularly in the affordable and low-priced segments," he stressed.

Looking ahead, Dinh remarked that areas where “property price bubbles” have occurred might see prices adjusted to reflect market realities, leading to a more balanced supply and demand situation and reasonable prices.

However, he cautioned that real estate prices are unlikely to decrease overall, as they will continue to be influenced by market demand and the quality of the projects.

According to data compiled by VARS, 27,335 realty projects came on the market in the second quarter of this year, 50% of which featured apartments.

Of this, 60% were high-end apartment projects with prices of over VND50 million ($1,983) per square meter. Mid-end and affordable apartments accounted for just 14% and 7% of the supply, respectively.