The country’s urban area will increase to 460,000 ha in 2020 from the current 105,000 ha under a national strategy on urban development, according to Nguyen Manh Ha, director of housing management department under the Construction Ministry.

A country is seen to have a booming property market when it has an urbanisation rate of between 30 percent and 70 percent, Ha said.

“With the current urbanisation rate of 28 percent, Viet Nam ’s property market is approaching the process, and the country’s property market will be booming as the urbanisation rate reaches 45 percent in 2025,” he said.

From now to 2020, he said, about 35,000,000sq. m of housing must be built a year to meet the increasing demand of accommodation.

HCM City alone needs 200,000 sq. m of A-B class offices and 10,000 hotel rooms of 3-5 star standards.

Ha believes that foreign investment in the sector would range from 8 to 10 billion USD in five years.

Multi-million dollar projects have been developed in the past two years including the Bac An Khanh new urban area, the Keangnam Landmark Tower in Ha Noi and Kumho Asiana Plaza in HCM City .

A lack of transparency in the sector remains the biggest challenge for Viet Nam ’ fledgling real estate market, which demonstrates its lack of professionalism and will result in bigger risks for businesses involved, according to insiders.

Almost all of the major property projects were carried out through cumbersome administrative procedures, while market information was distorted by land speculators and underground deals, which confused both investors and policymakers.

Policies and procedures regarding investment in Viet Nam ’s real estate market have failed to match international norms, while local brokerages and consulting services are faced with a lack of qualified staff.

Experts said the government should devise a financing mechanism to help the sector, which is challenged by a shortage of investment.

The banking system is not ready to grant long-term loans for property projects, excluding its middle-term credit with high interest rates.

To avoid high taxation and costly brokerage fees, many people tend to make unofficial land and house transactions with vaguely worded documents, which could result in high risks for their businesses.

Source: VNA