Venezuela's president, Hugo Chávez, has halted the construction of a shopping mall in the capital and announced that the prime block of urban real estate should be expropriated after being shocked at the "monster" development.

In his Sunday address Chávez said he was heading through downtown Caracas when he was shocked by the sight of a huge, nearly-finished mall amid the high-rise offices and apartments. "They had already built a monster there," Chávez said. "I passed by there just recently and said, 'What is this? My God!'"

He ordered the local mayor to halt construction, and suggested the sprawling six-storey building might be put to better use as a hospital or university. The new Sambil mall was scheduled to open in the La Candelaria district early next year, packed with 273 shops, cinemas and offices. Chávez complained that it would add more traffic to an area that was already so crowded "not a soul fits".

"Stop it, Mr Mayor," Chávez said during his weekly broadcast on Sunday. "And we're going to review all of it. And we're going to expropriate that and turn it into a hospital - I don't know - a school, a university."

The newly-elected mayor of the district, Jorge Rodriguez, told the president he would get the job done, though how remains unclear. Neither he nor Chávez gave any details of possible compensation.

Victor Maldonado, leadzer of Caracas Chamber of Commerce, Industry and Services, said the sudden decision to freeze one of Caracas's biggest investments threatened 3,000 jobs and had led to a "rise in uncertainty" among businesspeople. Constructora Sambil, the company building the mall, was closed for the holidays, and phones at its offices went unanswered.

Chávez, who has nationalised Venezuela's largest phone company, electric utilities and oil projects, suggested the property was too valuable to be left to commerce. "How are we going to create socialism, turning over vital public spaces to Sambil?" he asked. Rodriguez said that downtown communities would be consulted on the most appropriate use for the building. "We're going to respect private property," he said.

Chávez has previously intervened in local issues, scolding local officials about waste collection, and ordering beer trucks to stop selling alcohol on the streets.

Steve Ellner, a political science professor at Venezuela's University of the East, said Chávez sometimes tried to impose decisions when he thought local institutions were not performing as they should.

"Chávez, I think, is correct to a certain extent in criticising this 'monster.' But that's not the way to do things," Ellner said. "Institutions are necessary, and I think that if this revolution is going to be successful in the long run they have to establish new institutions in order to avoid this kind of decision-making process."