Thursday, May 16, 2013

Social and Resettlement Housing: Quality and Price Remain a ...

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Although the real estate market in Vietnam is in a freeze and thousands of apartments cannot be sold, demand for low cost and social houses in Hanoi is very large. This paradox has been the case for a long time, but measures have yet to be taken to solve it. Mechanisms and policies are seen as barriers to the illiquidity of the market.

Low interest rate as well as binding conditions is the reasons why for so long investors have paid little attention to social housing segment. Social housing projects or resettlement housing projects in recent time are assigned to a specific unit, organization or business to construct and distribute to eligible people of land clearance, in a way of imposing on planned individual zones. However, quality of such projects is often low and infrastructure is not complete, which causes people living in these areas several difficulties.

This invisibly forms a bad concept to people on resettlement and social housing. People always think that resettlement and social housing is low grade and having poor quality. Talking about this issue, Mr Nguyen The Diep, Vice President of Vietnam- Germany SMEs Association, also Chairman of Reenco Red River Investment Corporation, shared that is the state wants resettlement and social housing to develop, to be able to attract investment and people, it should standardise price and quality of social housing. Specifically, there should be accurate markers of quality and price, which means price should be determined on using value, furniture, utility or apartment quality.

Building the benchmark of house types will be the basis for evaluating their quality, thus helps remove the bad concept of low grade and poor quality social and resettlement housing. People will not be indifferent with social and resettlement houses but have a more positive attitude towards those kinds of houses like that of commercial houses. This is also the basis for the assessment of investor?s responsibility for the products they make.

He also made recommendation: ?The state should take the quality and price of social housing as benchmark to create basis for evaluating the capacity of investors and comparing with other segments. Thereby, the state can stabilise people?s psychology, provide adequate knowledge for people so that they are able to distinguish and assess quality of apartments whose prices are very different. Commercial house?s prices are ranging from VND20-30 million or even VND10 million per square meter, while social and resettlement house?s price is averagely VND13-15 million per square meter?.

Holding the same point of view, Mr Tran Ngoc Thanh, Deputy Chairman of the Vietnam Real Estate Association said that in fact, currently the state has some regulations stipulating that social house?s area must be less than 70 square meters, price must be consistent with scale, and social house must better serve the needs of the community. However, there remains a limitation of social houses. They can only ensure the most basic utility for people such as social security system including schools or parks. People have yet to enjoy facilities such as commercial areas, not to mention the cost of social and resettlement housing which is still too high compared to the income of low-income people. Mr Thanh propose that the state regulate and have more specific and drastic policies such as reducing VAT and exempting corporate income taxes to encourage investors to participate boldly in social housing construction.

Decree 71 gave a very positive direction enabling low-income people to enjoy the facilities, infrastructure of commercial houses by regulating that projects with area of 10 hectares or more have to hand over 20 percent of the land for the construction of social housing. But in reality, how to make this come into practice is still a hard question. Mr Thanh analyses: ?Currently, there are many businesses circumventing the law by applying for small projects with area of less than 10 hectares, or building commercial houses only, and 20 percent bound for social housing construction will be left empty for several reasons such as lack of capital to invest in the construction.?

He suggests that the State prescribe standards in terms of price and quality of social housing, as well as policy on corporation income tax exemption to assure people and give investors confidence to choose social and resettlement housing segment to invest in.

Luong Tuan

Source: http://talkvietnam.com/2013/05/social-and-resettlement-housing-quality-and-price-remain-a-barrier/

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