Apartment buildings in District 2, Ho Chi Minh City. Photo by VnExpress/Quynh Tran.
Ten apartment projects with over 6,500 units have been forced to stop sales over legal issues from January to September.
This is one of the reasons primary supply in the period dropped to a five-year low of 16,800 units, according to a recent report by real estate consultancy Savills.
The pandemic has placed further challenges on the market with at least three project launches delayed this year.
While the Savills report does not elaborate on the legal issues, industry insiders have repeatedly said that conflicting provisions in various laws regulating the real estate sector are making it difficult for developers to obtain licenses.
Another challenge involves land inspection. Housing projects are inspected to ensure complete legality if they are on land parcels of which even a portion used to be public in the past, and this is delaying the licensing process.
The Ho Chi Minh City Real Estate Association (HoREA) said in a recent report that obstacles in acquiring permits have been a major roadblock for real estate developers. From 106 housing projects approved in 2016, the figure fell to 16 last year and 12 in the first six months of this year, it added.
The Savills report says total sales in the first nine months dropped to a five-year low of 14,000 units, 71 percent of them belonging to Grade C, the affordable segment.
In the third quarter alone, absorption rate fell 13 percentage points year-on-year to 72 percent.
In the last quarter, Savills expects to see over 16,000 units entering the market, 90 percent of them from the subsequent phases of existing projects.
The majority of them, 56 percent, will be located in the eastern districts of 2, 9 and Thu Duc, which could be combined to form a “city within a city” in the future.