Many real estate developers in Ho Chi Minh City are facing stagnation in hundreds of projects due to insufficient legal paperwork.
Novaland – one of the leading real estate developers – has just sent a letter requesting help from the government and related ministries to break through difficulties for its 30-hectare project in District 2 of Ho Chi Minh City.
More than 25 international banks, organisations, and financial institutions are financial partners to Novaland
The letter that Novaland has sent to the government and relevant ministries, on one hand, requested pushing competent bodies to speed up reviewing procedures and support developers to continue their project as soon as possible, to stabilise their business.
On the other hand, as the developer holding the biggest land fund currently, the request is a helping hand lent by Novaland to many other developers facing similar difficulties. The reaction from the government and local authorities will consolidate the belief of both domestic and international developers in the investment environment of Ho Chi Minh City.
More than 25 international banks, organisations, and financial institutions are financial partners to Novaland. International institutional investments often come with very strict standards and are highly demanding. In many cases, these institutions not only pay attention to the quality of the assets when gauging the developers' abilities, but they have been carefully considering the developers' capacity and commitments. They stipulate many conditions on maximum ownership and key positions in the capital contribution and investment contracts. This clearly demonstrates their principles of "choosing the right partner" – and there are only a handful of developers like Novaland who can tick all the boxes and live up to all standards set by international institutions.
In return, the foreign capital from international financial institutions helps Novaland avoid the dependence on domestic credit sources, especially as the government is tightening credit poured into the real estate sector.
Le Hoang Chau – Chairman of the Ho Chi Minh City Real Estate Association (HoREA) has just submitted to the Party Central Committee's Economic Commission a proposal to create a more transparent, fair, and competitive business environment, citing a remarkable decline in the number of housing projects in Ho Chi Minh City in recent years.
According to HoREA, between October 2015 and the end of 2018, there were 126 commercial housing projects stuck with investment procedures as they are located in a land fund that includes a mixture of plots earmarked for different land uses. In addition, 158 other real estate projects built on land managed by the state were halted and are being reviewed for compliance. The current difficulties of the Ho Chi Minh City real estate market were only temporary, caused by conflicts and overlapping legal frameworks and inadequate enforcement.
According to experts, if the difficulties in procedures, policies, and mechanism related to the real estate sector are not solved quickly, not only Novaland but many other developers will face difficulties in implementing their projects.
In the past two years, the HoREA has submitted many petitions and proposals to the government and local authorities to resolve these obstacles and help developers steer clear of the risk of bankruptcy and society to avoid the negative impacts.
Chau added that the leaders of Ho Chi Minh City will meet with the HoREA and real estate developers to look for solutions for delayed projects next week.
“Based on these solutions, we can hope that the real estate market will be more stable towards the end of this year,” Chau said. VIR
Thousands of real estate brokers have had to leave the market, which has cooled down.
2020 would be another difficult year for Ho Chi Minh City’s real estate market due to lingered tight credit and red tape for real estate projects.