That is the highly-probable reality which is a huge challenge for urban planners in the country’s biggest city, as the legal corridor is now opened for owners of land plots of as small as 120 square meters to develop private condo buildings. The legal basis is provided for in Circular 16/2010/TT-BXD, issued by the Ministry of Construction to offer detailed guidelines for implementing Decree 71/2010/ND-CP, and started to take effect last week.
Anyone can build apartments
The circular allows individuals to develop private apartments within existing residential areas in cities around the countries. For the first time, apartments in such mini condo buildings will be granted certificates of ownership and can be transferred like those in large-scale commercial buildings.
For many people, allowing such small-sized apartment development is good news, for it will create chances for them to afford an apartment for their own thanks to the apartments’ low prices. This will also help quench the thirst of housing demand in the society.
However, others feel concern that developing the so-called ‘mini-apartment’ projects in existing residential areas will challenge the city authorities in terms of social management, and even worse, the move will quickly tear down urban planning in a city like HCMC.
The new rules allows families and individual to build an apartment building that has at least two stories, and each story must have two or more apartments measuring from 30 square meters. Those condos have to meet the standard management requirements as specified in the current housing law.
The regulation requires all future private housing buildings that have a total floor area from 1,000 square meters, or from six-story height to have a certificate of construction safety granted by competent management organizations. Once the private housing buildings meet all requirements, which are in fact very simple, they will be offered property ownership certificates for each apartment in the building, and the apartments’ owners are allowed to resell their property to others. Like other commercial condos, the land area on which the private apartment building is developed will be used as common property for every resident living in the building.
Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, which used to send a petition to develop 20 square meter apartments only to be turned down, comments that the new rules are very interesting and also create a very complicated problem for the city.
“This is interesting because it will bring profits to the society, allowing anyone to develop apartments,” Duc says to the Daily.
Duc says such small-sized apartments will surely be cheaper because developers do not have to spend money on technical and social infrastructure development, nor do they have to pay land use tax as big commercial condo projects do. Moreover, such private buildings often enjoy simple and quick procedures in obtaining a construction permit; sometimes it takes only ten days for a permit granted. Under current construction conditions, it will take only from three to six months to finish such a condo building, meaning the investor will recoup investment quickly and can maximize their profits in a short period of time.
Duc comments that for buyers, the would-be low-cost apartments will meet the demand of the majority of homebuyers who have a meager budget and have no way but live in leased houses or apartments. Thus they can buy those apartments to either meet their accommodation demand or possess a property for their own.
Challenges to management and planning
Seen from the city’s master plan, allowing such private apartment development may lead to chaos in planning, breaking the city planning, says Duc of Dat Lanh Company.
He explains that an existing residential quarter along a small street with hundreds of houses will surely become overloaded if some mini-apartment projects with hundreds of apartments are crammed into the quarter.
Tran Minh Hoang, board chairman of Vinaland, seconds his colleague’s ideas, saying that giving the green light to such apartment projects will help nothing but pose many challenges to management organizations such as social security and firefighting protection among others.
Hoang says developing such private condos will spoil the city’s relocation plan to develop residential sections in outlying districts. Instead of going out to the outskirts, many will manage to stay in the urban center, accepting to live in a small apartment in return for many conveniences. As a result, the city’s population will face more pressure in the coming time.
In addition, apartment management is a tough problem for private developers, and disputes will arise and are not an easy task to address, even for professional property developers.
In fact, some property developers have recently begun set eye on the ‘fast-food apartment segment’ by selecting some areas in existing residential quarters for their condo development. The advantages of such projects include simpler compensation and site clearance plus the availability of existing infrastructure systems. Meanwhile, developers who risk their investments into big projects have to face prolonged procedure in site clearance and in seeking a license for construction.
With a private apartment, a minimum land area of 120 square meters is enough for a mini-apartment building. An executive officer of a real estate company says he is asking for a license to develop a private apartment project under his own name, not under his company name.
Some property companies, however, show concern whether allowing such 30-square meter apartment development will violate the housing law when those apartments are traded as commercial ones. The current Housing Law requires commercial apartments to be at least from 45 square meters each.
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