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No early end to real estate crisis   2008-12-24 - Viet Nam News

The real estate market will not show signs of recovery until the end of next year, Viet Nam Contractors Association vice chairman Nguyen Quoc Hiep told the Customs newspaper.

When did the real-estate crisis begin?

There will be a new policy which will revise land use prices from the beginning of next year.

Around August last year when some real-estate firms declared bankruptcy, plummeting real-estate prices sent many companies chasing loans to build their projects. This resulted in exaggerated property values.

What is your opinion of this year’s real-estate market?

The financial crisis has resulted in lower demand for real estate. Construction companies earned sales profits of between 1and 3per cent while paying interest rates between 8 and 10 per cent for banks.

Real-estate firms are waiting to see changes in macro-economic policies.

What are your forecasts for real estate in 2009?

In my opinion, the market will only show signs of recovery by the end of 2009. The State has allowed Vietnamese abroad and foreigners working in Viet Nam to buy houses. But demand for buying houses is still low.

People should be cautious about the real estate market next year.

What support does the real estate market need to shorten its recovery period?

It takes two to three years to complete the approval procedures for real estate projects.

With such bureaucracy, supply will not meet demand for 2010. Projects need to be approved right now.

As far as I know, there will be a new policy which will revise land use prices from the beginning of next year. This will be good for the State purse, but it will make buying harder. It is important to balance the State budget with public interests.

The Government will certainly take interest in small and medium-sized companies when crafting policies. Hopefully, it has accurately assessed the situation so that small and medium-sized firms will not be hit too hard.

Monetary finance, tax, and especially land use price policies impact directly on real estate firms.

What do you think about the State Bank’s recent decision to allow loans to profitable real estate projects after a period of tightening credit policies in the real estate sector?

They are all necessary measures because the bank sometimes needs to loosen policies to lend firms money. And now it has to tighten lending procedures with real estate projects, because if the bank fails to withdraw capital, it will adversely impact the economy.

What is your advice for real estate companies at the moment?

From my point of view, they need to keep hold of their capital to weather next year’s "storm".

They should think of doing business only after 2009. Except State corporations or sole trading companies, small and medium-sized firms need to keep their capital throughout this period.

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