The real estate market had failed to strike a balance between commercial and social housing projects, deputy Construction Minister Nguyen Tran Nam complained in Ha Noi yesterday.

"Investors have been interested only in housing and new urban projects for sale to high-income earners," he said.

"Housing paid for by instalment or for rent to low-income earners have failed to win their attention."

Most social housing projects had started only when a Government Resolution to promote this type of project was issued last year.

Although 300 social housing projects worth VND55 trillion (US$2.75 billion) were now underway, the number was small against the more than 2,500 housing projects; new urban projects and other real-estate projects across the country.

These occupied a total of about 100,000ha.

Conference

Nam, who was speaking at a two-day conference that began yesterday, said development of the market was now spontaneous.

It lacked specific strategies and sound plans but continued to attract foreign investors. Inadequate planning was a major weakness that needed to be addressed as real-estate transactions increased, he warned.

Local "freezing" had occurred with the unplanned spontaneous development and the housing rental market had been unable to meet demand.

"Intervention is required to have the real-estate market develop in accordance with social demands," he said.

The Central Steering Committee for Housing and Real Estate Market Policy has organised the conference and representatives of more than 1,500 real-estate enterprises, investment funds and international speakers from 15 countries and territories are attending.

Singaporean economist Professor Habibullah Khan agreed that the government should play a key role in Viet Nam's real estate market.

He also forecast that Foreign Direct Investment was a potential cure for its lack of capital.

If the country's economic indices continued positive, it would get more FDI for real estate projects, he said.

Investment

Almost 500 FDI-funded real estate projects with registered capital of more than US$40 billion were reported as of the end of last year.

FDI in real estate totalled $2.5 billion or 21.8 per cent of all newly-registered FDI in 2009. A new report from the Planning-and-Investment-Ministry shows that real estate now ranks third in the list of industries attracting foreign investment to Viet Nam.

The average size of a real-estate project is almost $145 million.

Construction Minister Nguyen Hong Quan said the real estate market impacted on the entire economy.

It was closely tied to the financial, monetary, construction and labour market.

"Effective management of this market will make a considerable contribution to socio-economic development; increase infrastructure construction; sustain urban and rural development, and generate jobs," he said.

Source: VNS