Freezing Hanoi Real Estate Market: Investors in Dilemma

 

On real estate exchanges and brokerage centres, many residential land plots or villa grounds in business districts are offered for sales but the demand remains very weak and volume of transactions continues to decline as a result. Most investors are psychologically waiting for another drop in prices on speculations that the maturity of bank loans incurred by “treading water” investors is nearing. The repayment pressure will force short-term investors to sell their assets to settle their debts with banks. According to salespeople in Hanoi, on real estate trading floors are still full of visitors but a very few of them make deals.

 

Currently interested areas are Van Khe, An Khanh and An Hung because the expanded Le Van Luong Street is announced to open for traffic in October. These are a few areas in Hanoi to have stable prices and many successful deals. The Van Khe Urban Zone is completing infrastructure items. A street-facing land plot with an area of 82 - 100 square metres and pavement width of 11 - 24 metres is currently traded at VND60-80 million per square metre.

 

In the An Hung Urban Zone, semidetached apartments are being sold at quite high prices. A plot with an 11.5 metre street facade is being sold for VND50 million per square metre. Many apartments are sold at VND60-70 million per square metre although the original price is only VND29.5 million per square metre.

 

The most interested project is now the Park City project on the extended Le Van Luong Street. In the first phase, its investors sold 24 villas and 100 semidetached apartments at about VND75 million per square metre (VAT excluded). The price for 120-square metre semidetached apartments and 240-square metre villas is sold at US$400,000-800,000 each. Intermediary stages make a margin of VND1.3 billion between original and selling prices on each unit.

 

While prices are dropping, many investors are hunting for business opportunities, especially in newly introduced projects.

 

According to some very experienced property investors in Hanoi, it is now the time for all investors to listen to new developments related to the project planning and implementation. There are many risks against secondary investors at this point of time because the market trend has not established. The weak liquidity will cause many investors to suffer from capital jams.

 

Mr Nguyen Do Viet, Deputy General Director of Song Da Thang Long Company, said: The market will hardly improve in the near future. The supply will increase and this will drive the market.

 

In fact, the Decree 71/ND-CP issued by the Government has also caused considerable impacts to the housing market. Most investors are standing on the sideline to wait for new developments in macro policies. In the meantime, capital flows for the market are still tightened. Making transparent the real estate market is one of most important objectives of the Government. The current monetary policy currently disfavours the property market and this will put pressure on capital flows of real estate companies.