Urbanization spurs socio-economic development

The Central Economic Committee in association with the Ho Chi Minh City Real Estate Association and HCMC Open University held a seminar on developing a transparent and sustainable housing market, promoting the process of urbanization and urban development in Vietnam to 2030, with a vision to 2045, on November 27.
High-rises along the Saigon River in Binh Thanh District in HCMC. (Photo: SGGP)
High-rises along the Saigon River in Binh Thanh District in HCMC. (Photo: SGGP)

Mr. Nguyen Duc Hien, Deputy Head of the Central Economic Committee, said that over the past ten years, urbanization and urban development in Vietnam had seen rapid growth, promoting the country's economic development and achieving many set targets. The space and number of urban areas have increased rapidly from 33.5 percent in 2010 to nearly 39 percent in 2020. Urban areas were evenly distributed, creating a nuclear driving force for the process of socio-economic development. The urban economy is one of the three pillars of the economy, accounting for more than 7 percent of the country's gross domestic product (GDP). However, urbanization and urban development still show many shortcomings, such as the risk of imbalance in development between urban and rural areas, overloaded infrastructure, and asynchronous connection.

Assessing the real estate market recently, Mr. Nguyen Van Sinh, Deputy Minister of Construction, said that the development of the real estate market is not sustainable. There is still a potential risk of instability. Real estate prices, especially housing prices, nail at high levels and remain in an upward trend, especially in big cities like Hanoi, Ho Chi Minh, and Da Nang. The structure of some real estate products, including housing, is imbalanced. There is a lack of small and medium-sized goods, with prices suitable to the needs of the majority of people, especially the lack of rental housing and social housing. Meanwhile, there are signs of an oversupply of luxury housing.

The mobilization of resources to implement social housing development programs to serve social policy beneficiaries, low-income people in urban areas, cadres, civil servants, public employees, armed forces, and workers in industrial zones remains limited. The situation of rampant and spontaneous investment or delayed projects with asynchronous investment and a lack of infrastructure connection still happens relatively common. High inventory causes a waste of land resources and social investment capital.

It is forecasted that the demand for housing in the period from 2021 to 2030 will continue to increase, especially in urban areas, due to the population growth rate and urbanization trend. Increasing people's income raises affordability in general and willingness to pay for housing demand in particular, the need to renovate and replace houses due to a lack of housing quality.

Experts said that the current urban population rate is about 40 percent and will increase to 45 percent by 2030, so it requires an annual increase of about 70 million square meters of urban housing. New housing demand will continue to concentrate in a few big cities and industrial zones, namely Ho Chi Minh, Binh Duong, Dong Nai, Vung Tau, Hanoi, Bac Ninh, Hai Duong, and Hai Phong. Hanoi and Ho Chi Minh cities - the two big cities with a high population attraction - which requires a rapid increase in urban housing areas, will account for over 50 percent of the country's urban area.

HCMC’s real estate market has the largest size in the country, reflected in the number of houses, office, and retail space, as well as rental accommodation. With a large population and the position of the economic center of the country, the demand for real estate products here is also huge and diverse. The operation and volatility of the real estate market in HCMC have a great impact on the real estate market of the country.

Mr. Le Hoa Binh, Member of the Standing Committee of the Party Committee of HCMC, Director of the Department of Construction, representing the city’s leaders to attend the seminar, said that the policy and the legal document system was one of the important factors, directly affecting the development of the city's real estate market. He said that the promulgation of tight monetary policies in 2008 and 2011 greatly affected the regression of the real estate market during this period.

Moreover, the enactment of the 2003 Law on Land has also resulted in strong land displacement for urban and residential development projects before the law becomes effective. Therefore, determining the impact of policies and legal document system on the real estate market in HCMC needs to summarize and assess the correlation between the development process of the real estate market and the time of issuance of the Law on Land, the Housing Law, the Real Estate Trading Law, and policies on housing and credit.

Concurring with this point of view, Mr. Le Hoang Chau, Chairman of the HCMC Real Estate Association, said that there is almost a maze of legal documents governing the real estate market. In general, it is very complicated, overlapping, even contradictory, like a matrix discouraging investors. But over the past ten years, the legal system has gradually improved, mostly shown through the promulgation of the 2020 Investment Law, the amended 2020 Construction Law, which simultaneously amending and supplementing some articles of the Housing Law, the Real Estate Business Law, and the Law on Environmental Protection. The Government is considering issuing a decree amending decrees on the implementation of the Law on Land, ensuring consistency and continuity, solving some major problems of the real estate market.