Gov’t spending will benefit real estate sector: official

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Báo Thanh Niên English - 33 month(s) ago 4 readings

Around VND120 trillion (US$5.75 billion ) will be injected into the economy in the remaining months of 2012, giving a much needed boost for various sectors including real estate, a government official says.

The money is the remaining part of a VND180-trillion fund that the government has set aside for public investment, news website VnExpress cited Deputy Construction Minister Nguyen Tran Nam as saying.

When the fund is disbursed, it will help stimulate economic growth and have positive impacts on real estate and other sectos, he said, noting that recent cuts in deposit interest rates will also drive investors towards properties soon.

“But in spite of all incentives, real estate companies have to restructure their business and products, aiming for market segments with high demand and purchasing power. They have to change their own projects first to save themselves,” he said.

Le Xuan Nghia, vice chairman of the National Financial Supervisory Council, said the injection of VND120 trillion into the economy is necessary after fiscal policies were tightened too much in the fight against inflation, causing the economy to slow down.

He said increasing spending could help revive the real estate market slowly.

“Never before has the real estate market received so much attention. The government is trying to rescue the market and has begun to view its as a foundation market (of the economy),” he said.

Real estate group Knight Frank said in a statement last week that many companies and individuals involved in the real estate market have lost considerable sums of money over the past three years and many people have looked for alternative investment options.

“However, there is some light at the end of the tunnel,” it said, noting that tighter legislation on gold trading, a downward trend in bank deposit rates and profit taking from the stock market will lead to a “momentum” shift.

“We are seeing many of the more experienced developers, investors and buyers that have been sitting on the sidelines in the past 12 months now deciding that this is the time to dip their toe back in the real estate water,” the Knight Frank statement said.

“With further interest rate cuts predicted throughout the course of 2012, confidence is slowly beginning to come back to the market and provided the global economy doesn’t give us any further nasty shocks for the remainder of the year and inflation remains stable, we firmly believe the real estate market will start to recover.”

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