Photo: Duc Anh
Real estate association calls for 50% fee while city's finance department seeks 80%.
The Ho Chi Minh City Real Estate Association (HoREA) has proposed the city’s People’s Committee agree to a 50 per cent fee being imposed for converting agricultural land into residential land.
The city’s Department of Finance has previously proposed an 80 per cent fee in an attempt to increase the local budget. There is currently no fee imposed on converting land-use purposes.
HoREA believes that its proposal would help the sustainable development of the real estate market. “While investors try to cut prices to give the customers the chance to buy an apartment, the city should apply a reasonable fee level of 50 per cent to support real estate companies,” Mr. Le Hoang Chau, HoREA’s Chairman, told VET.
According to the city’s Department of Finance, investments in the fields of manufacturing, industrial zones and export processing zones earn lower profit than those in the fields of housing, trade and services.
“The finance department’s proposal is unreasonable at a time when many large industrial developers are recording higher profits and stability than property developers,” Mr. Chau added. “Real estate enterprises have to meet a range of obligations when implementing projects, and it is the buyer who bears these costs when buying an apartment.”
A recent report from HoREA revealed that the city’s property market has experienced some instability. Market transactions fell slightly in the second quarter, it wrote, while at the beginning of the third quarter it has seemed unusually crowded after a wide range of products from large projects have been launched.
Additionally, many real estate projects and deposit contracts from customers are being used as collateral for loans for investment capital at commercial banks. According to HoREA, instability has also been due to developers being incompetent, lacking in professionalism, or using deposits and credit for the wrong purposes. There has also been loose management by credit organizations.
According to figures from Cushman & Wakefield’s second quarter review released in June, the total increase in industrial land in Ho Chi Minh up to 2030 is projected at approximately 2,600 ha from ten new industrial parks, an increase of 66 per cent against current stock.
In the office segment, over 80,000 sq m of new Grade B supply are expected to be completed in 2016 but limited Grade A supply, particularly large spaces, will keep average rents in the segment stable with a moderate increase likely by the end of the year.
From the second half of 2016 onwards, approximately 80,000 units are expected to be launched in Ho Chi Minh City. Future supply tends to be concentrated in southern and eastern regions, accounting for nearly 60 per cent of total future stock.