Real estate: many projects terminated

The expectation that the ratification of Hanoi development master plan by the Prime Minister will create a new wave of investment for real estate projects has not come true.

But, it is having serious impacts on the property market, particularly the fates of hundreds of projects.

The current attention of the public and enterprises is largely focusing on real estate projects on the “death list.” Projects located in 3, 3.5 and 4 belt zones catch more attention than others. Presently, these zones have a total 785 project schemes, with 244 schemes cleared in the first review. The second phase of review will give conclusion to some 540 project schemes.

According to the regulations, at the second review, projects will be categorised into two groups: either projects to be continued or projects to be terminated.

As many of 540 projects to be reviewed in the second phase were approved before Hanoi was expanded (it merged the entire Ha Tay province and small parts of Vinh Phuc and Hoa Binh provinces); some may have thus been kicked off. These projects are located in green zones of Hanoi, areas between the central urban zone and satellite urban zones. As a result, many projects will have to be terminated or relocated. According to unofficial information, about 160 projects will be brought to an end.

When the real estate market outlook is lacklustre, “master planning” factors will impact market demand to a certain extent. And, the eradication of projects outside the master plan will affect the psychology of consumers.

Ms La Thi Kim Ngan, Director of Hanoi Construction Planning Institute, said Hanoi master planning will be an important basis to review and assess projects. Projects will be reviewed and adjusted on the basis of criteria and principles divided into three groups of projects: Group 1 is totally fit the master plan; the Group 2 is partially suitable and in need of modification; and the Group 3 is contrary to the master plan and in need of changing land-use function or investment purposes.

According to unofficial information, up to 160 projects are listed in the Group 3. This is a big number and it is forecast to have adverse effects on the already bad market.

Ngan said, according to the approved master plan, Hanoi consists of a central urban zone and five satellite urban zones and ecological urban zones. The urban space development orientation is the legal foundation for Hanoi to define whether a previously approved project is suitable or not.

According to preliminary statistics, many large projects are located in 3, 3.5 and 4 belt zones like Nam An Khanh, Dong Son, Duc Giang, Thanh Ha A, Thanh Ha B, Galaxy I, Galaxy II and Kien Hung. Besides, Me Linh district has dozens of projects like Thanh Lam – Dai Thinh and Phuong Vien.

According to the plan of the Hanoi People’s Committee, by the second quarter of 2012, the city must complete its detailed rezoning and plan. Hence, this is the time the fate of many projects will be determined. Many investors and the public have raised concerns over the termination of ongoing projects, as money has already been raised for and spent on such projects. If those projects have to change their investment purposes or have to stop, what will the fate of investors (both primary and secondary) be when their entire assets are put in such projects?

Source cvccinews

Tags: Vietnam Property market, Vietnam property sector, vietnam real estate market