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Ha Noi property market goes west   2010-09-04 - VNS

Ha Noi’s western areas have great opportunities and resources for real estate development projects, according to real estate experts.




Dang Hung Vo, former deputy minister of Natural Resources and Environment, told participants at a recent workshop focused on real estate and investment opportunities in the west of Ha Noi that investors and individuals had shown an interest in developing the western part of the city.


The decision to develop Ha Noi towards the west was decided by the Government and city authorities several years ago. This tendency towards westward development was confirmed again in the city’s recent master construction plan.


Vo said the master plan of expanded Ha Noi was divided into two zones: nuclear urban area and neighbouring regions.


An overall plan for Ha Noi was established to expand these areas. The inner city area will stretch from the left bank of the Red River to the second ring road, reaching a population of about 1.2 million by 2030. High-rise buildings are restricted in this area.


The extensions of the nuclear urban centre, including a chain of urban areas along the fourth ring road and the southern region of the Red River, are expected to reach a population of 1.25 million people by 2030. Investors are being encouraged to build high-rise buildings in this area to shift the population from the inner city.


The series of urban areas to the north of the Red River will consist of Me Linh District, with about 0.45 million people, Dong Anh District, with 0.55 million and Long Bien-Gia Lam districts, with about 0.7 million by 2030.


Five urban satellite towns will include Hoa Lac, Son Tay, Xuan Mai, Phu Xuyen, Phu Minh and Soc Son. Each satellite town will include one or more specific characteristics to support and share the need for urban housing, high-quality training, industry and services, and job creation.


Duong Duc Tuan, deputy director of the Ha Noi Planning and Architecture Department, affirmed that with such development, the western area of Ha Noi would have many opportunities and resources to carry out real estate investment projects. He added that land funds were available for infrastructure projects in the form of build-transfer (BT) and build-operate-transfer (BOT) in this area.


According to many experts, finance problems have posed a challenge. Capital resources from official development assistance (ODA) and foreign direct investment (FDI) are currently difficult to mobilise and the State budget cannot afford the estimated US$70 billion investment.


As a result, capacity to implement the master plan can only rely on resources from the land fund. Appropriate mechanisms and policies should be developed to encourage real estate investors to get involved in the implementation of the master plan in combination with efficient use of land resources.


Land bubble


In the first quarter this year, a land bubble phenomenon occurred in the area around Ba Vi which saw land prices increase unexpectedly. Increases varied between 35 per cent to 45 per cent depending on the specific area, according to the Kim Bai and Ba Vi administrative centres.


During this land fever, land in the west of Ha Noi fetched high prices. For example, land in Van Khe, Ha Dong District ranged from VND70 million ($3,589) to 80 million ($4,102) per sq.m, and in Nam An Khanh the price was around VND30 million ($1,538) per sq.m.


However, fewer transactions are now taking place because many land traders have fled the area. Land prices have fallen by 70 per cent compared with peak land fever prices.


Vo said land fever in Ba Vi did not follow market rules. Traders did not carefully study information about the land but simply rushed to buy land under the herd mentality. Unfortunate consequences are inevitable, he said.


Nguyen Tran Nam, deputy minister of Construction, said commodity prices would follow the market rule which centred around the law of supply and demand and the law of value. Although real estate was a special kind of good, it still complied with economic laws and other factors.


Authorised agencies could regulate prices by increasing supply, he said.


Currently, major capital for the real estate market comes from banks, but financial institutions are beginning to narrow the flow of capital with strict regulations in order to prevent a real estate bubble.


The Ministry of Construction has proposed potential channels for mobilisation of capital for the real estate market in the future, such as real estate trust funds and savings funds on housing.

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