Answer
Question: We are a group of foreign companies wishing to search the opportunities to invest in some real estate projects in Vietnam to provide the apartments and villas (for rent and sale). As we knew, there are two types of project as “new urban zone” and “residential housing complex”. We think that both types have the common characteristic is to provide apartments and villas to the customers. How could we basically classify each type?
Answer:
As defined in the Decree No. 02/2006/ND-CP of the Government dated 5 January 2006 issuing regulations on new urban zones (“Regulations On New Urban Zones”), a new urban zone project is an investment project to construct a synchronous urban zone that has a system of infrastructure works, social infrastructure, residential zone and other service works, to be developed to connect to existing urban zone or to form a separated urban zone, to have the borders and functions that are in compliance with urban construction plan as approved by the competent State authority, the administrative border line of the new urban zone belong to a province.
Moreover, under Article 4 of the Regulations on New Urban Zones, the new urban zone must cover a land area of 50 hectares or more. In some cases, a new urban zone project may have less than 50 hectares of land but the minimum area must be 20 hectares.
The residential housing complex is not defined as detailed as the new urban zone. It is not be limited by the land area covering condition and other conditions on the functions of the new urban zone.
Under Article 5 of Decree No. 153/2007/ND-CP dated 15 October 2007 of the Government, detailing and guiding the implementation of the law on real estate business, both new urban zone project and residential housing complex project require the investors to fulfill the conditions on financial capability. For new urban zone project, the investor’s own capital must not be less than 20% of the total investment capital of the project. For the residential housing complex project that occupies less than 20 hectares, the investor’s own capital must not be less than 15% of the total investment capital of the project. For the residential housing complex project that occupies 20 hectares or more, the investor’s own capital must not be less than 20% of the total investment capital of the project.
Based on the above, some of the most important criteria to classify the projects are the land covering area of the project and the functions of the project.
