Hanoi Realty Market: Signs of Stagnancy

 Two burdens at the same time

A survey shows that land price in many suburban areas of Hanoi such as Soc Son, Phuc Tho, Thach That and Ba Vi, is decreasing by VND 2-3 million per square meter against March 2011.

 

 Ms Le Minh Thu, an investor in Ba Vi, said at the end of 2010, she sold over 700 square metres of land in Yen Bai Commune (Ba Vi) at VND 4 million per square metre, gaining profit of nearly VND one million per square meter against the middle of the year. However, as for the rest of 300 square metres, despite its good overlook and shape, the highest price offered from dozens of buyers was just VND 3 million per square metre. She expected that the longer she waited, the higher the land price would be. However, to her disappointment, now the land still waits for buyers.

 

After mortgaging his own house and calling capital from different sources, Mr Nguyen Hoang Long took VND 7 billion to buy land in Vinh Ngoc Commune, Dong Anh District, which recently has been considered the centre of land fever.

 

 Mr Cuong, another property trader, did not expect that the land in this area would have just a short fever. At the moment, the land price here remains stable whereas the banks are calling back the loan. “If making profit, I will sell. However, despite wanting to sell, I cannot do so. Monthly bank interest is over VND 100 million. If the land can’t be sold to recover the capital, I may lose my house due to inability to pay the principal and interest,” said Mr Cuong.

 

 Not only rural land invested for condo projects, even ones in the city also are tired of working out solutions to both input and output. In this context there’s no use asking bank for loans to implement projects, suffering high interest rates and high costs, which keeps apartment prices from decreasing, while there are so few customers, leaving investors facing two burdens at the same time.

 

 A survey of realty centres along Le Van Luong Street, North of Highway 32, over the past several weeks indicates that there are few successful transactions, since many people asked for information but did not buy.

 

 According to Ms Nguyet Anh, Dien Phat realty centre in Highway 32, in March, her office transacted 20 grounds, condos and apartments; however, since early April, there were only three condos exchanged Tan Tay Do, AZ Thang Long. “Big investors are hardly concerned with the market now; most customers are small investors with limited capital, fearing price devaluation and buying to keep money,” added Ms Anh.

 

 At present, there are over 10 big realty projects such as Kim Chung, Di Trach, Northern 32 of Tu Liem Housing Joint Stock Company, and New residential area Tan Tay Do along highway 32. However, since the land price in these projects peaked at VND 50 – 60 million per square metre, the investors are not concerned, especially in the context that credit capital is being tightened. Along Thang Long Highway, many realty offices have closed due to lack of customers.

 

 The market remains gloomy

 According to Mr Nguyen Manh Huy, Assistant General Director of Nam Cuong Corporation, the government tightening credit to curb inflation has greatly influenced realty, especially investors who are heavily dependent on capital loans or projects just starting implementation. Many plots have their price decreased; initially having an exaggerated price, and now finding no real demand, they must be sold out to pay off the debt.

 

Mr Tran Xuan Luong, Director of Thang Long Aviation Realty Office said: “Like vessels in the human body, every organ will be paralyzed and die when running out of blood, the realty market is the same. Investors lacking capital will have to decrease selling price, small individuals lacking capital cannot afford to wait, which makes the market slow down and become so quiet.”

Mr Luong also said, not only in realty, activities in every market will slow down when lacking capital. For example, at the moment, the realty market is quietest in the high-ranking sector, with a variety of projects offered but without transactions; given the price difference between central and non-central locations as well as the capital shortage, this sector must bide its time.

 

Ms Nguyen Thi Tinh, Director of Housing Realty Office, thought that to handle the lack of capital, it is necessary to call up shareholders for realty bond; loosen credit; decrease bank interest rate with non-manufacturing industries and Realty trust fund.

 

On the other hand, Mr Nguyen Van Minh, General Secretary of Vietnam National Real Estate Association, said most investors are waiting for big changes, thereby fostering economic development. Are all looking forward to new chances or does the market slow down only due to credit?

 

Realty experts estimated that from quarter II to the end of quarter III the market will be gloomy and quiet, remaining so until there is real capital invested into real estate.