Mr Matthew Powell, Director of Hanoi Branch of Savills, said the apartment market is estimated to be more active in the second quarter as investors [customers] will have more price and product options. However, oversupply is thwarting the 'treading water' opportunity of short-term investors who hunt for quick and thick returns on this market.
Arguably, the Hanoi apartment market and the investor sentiment have been adversely affected by a sudden fire at JSC 34 Building on Le Van Luong Street, Thanh Xuan district, which claimed two lives. But the nature of the issue may line in the bursting apartment supply, leading to a saturated market.
In Hanoi, according to Savills, there were over 1,000 apartments and 2,000 apartments launched to market in Quarter I and Quarter II 2010 respectively and more 3,000 apartments would be offered in the ending half of the year not mentioned to the projects offered its products in the last year and continued its launch in the current year, such as Usilk City or Dolphin Plaza. In Ho Chi Minh City, there are almost no projects sold out all of its products after launch as before. It is estimated that the apartment supply in this year may be up to 30,000 apartments, increasing 3 times as compared with that of 2009 and creating a visible pressure on the investors.
In the “hot” time of the apartment market last month, the activities of “sliding” are very exciting in the junior market with the involvement of both professional and amateur investors. The scarce supply due to investor’s launch in dribs and drabs in combination with the mind of greedy for gain of investors are key factors leading to rush for apartment buying and lending a hand to “sliding” action. The latest fever for apartments in Hanoi happened in November 2009 and its pinnacle was the event that a row of 3,000 peoples waiting to register for purchase of 300 Duong Noi apartments of Nam Cuong Group.
At transaction office of Nam Cuong (at Licogi building, No. 13, Khuat Duy Tien, Hanoi), any customer going out of door after each drawing for registration was immediately rounded up by brokers, asked for information of telephone, floor and apartment as well as negotiating for margin. Many peoples gained profits from VND 80 millions to VND 100 millions when selling their approved registration to brokers who then re-sold to the next preys to get higher margin.
According to a Director of a property brokerage company in My Dinh, trading of apartments in the golden land, Trung Hoa-Nhan Chinh was very busy in the early months of 2010. After many handing transactions, the original unit price of VND25- VND26 millions/m2 for apartment here was pushed up to VND40 millions/m2.
The apartments at buildings of Vinaconex at No. 5, Hoang Dao Thuy Street were even purchased by investors with margin of VND 2 billion for each at specific time. Many investors, with only an initial investment of VND 700 millions to VND 1 billion, equivalent to 20 percent - 30 percent value of the apartment, and gained profit of two or three times as their invested amount just in a short period when selling their registered right to other preys.
But now, many apartment projects are no longer “hot”. For example, Co Nhue Apartment of Nam Cuong Group is available at original prices after offer, which is the incredible in the half year ago.
In the context that the market is changing as compared with the ending last year, the buyers, mainly are short-term speculators, see that “sliding” is becoming more difficult. The final buyers are getting stick with their purchased apartments when they cannot make a quick sale for margin and are grieved to continue capital contribution and waiting for the next opportunities.
Although the prices of apartments is not low and supply also is increasing but many experts in real estate market believe that the current downward is only temporary. For substantial investors, their long-term investments in apartment market promise positive benefits. Firstly because many city-center apartments have registration for changed land use purpose done previously and so, investors can save costs. Secondly, the golden land bank for apartment investment is becoming exhausted when most of this land area has its owners. In medium-term, the increasing supply is still not matched with the actual demands as more and more emigrants are rushing to cities.
The expectation for low-price apartments may unpractical as the costs of input materials, such as steels, iron, cement, keep going up. According to Mr. Matthew Powell, Director of Hanoi Branch of Savills, it is the time when investors should pay attention to long-term investments instead of trying to gain immediate profits through ups and downs of the market.
Luong Tuan
Vietnamese
