5:33:24 PM | 4/5/2012
The Vietnamese real estate market has undergone a prolonged recession and witnessed a steep drop in prices. However, positive economic signals have revived the market to a certain extent in the second quarter. Bottom-fishing purchases increased, focusing on good, legally completed projects developed by prestigious investors.
Collecting assets
2011 was seen a very bad year of the real estate market which had never seen any stronger and longer downturn. In addition, a series of real estate bankruptcies worsened the market context. Worse, many capital-sharing investors filed lawsuits against developers to ask for the return of money. Investors lost the trust in the market. Pessimism overshadowed the market.
However, after the Government and the State Bank of Vietnam made good decisions like lowering deposit interest rate ceiling to 12 percent per annum, rescheduling loans for businesses and easing real estate credits, the market started to show signs of revival.
Notably, according to some big commercial banks, depositors are withdrawing their money from the banking system to invest in different investment channels because savings seem to be a less profitable option, especially interest rates are scheduled to be further cut towards the end of the year.
Ms Nguyen Minh Hanh, Director of VNI Real Estate Floor, said: Her office successfully brokered three land plots in Van Khe and Van Phu in early April.
“Most customers now buy for their residence. They prefer houses sold at VND4-5 billion each. Smaller apartments priced around VND2 billion each are also searched. According to many customers, property prices are now very low and investors also offer attractive promotional packages for buyers. Hence, they make buying decision rather than wait at this time,” said Hanh.
In Hanoi, the supply of completed projects is few. For example, in the west lie An Hung, Van Phu, Van Khe, North 32 and Tan Tay Do urban zones. In the east lie Vincom Vilages, Viet Hung, Sai Dong urban zones.
Meanwhile, selling prices of semidetached house and villas are now quite attractive. Hung An project is offering semidetached houses at VND55-60 million per square metre, and villas at VND45-50 million per square metre. Van Phu project is selling at VND45-55 million per square metre. North 32 project is quoting VND40-45 million per square metre. Tan Tay Do is selling at VND35-38 million per square metre. Vincom Villages is offering at VND75-78 million per square metre.
Rock-bottom
According to market research companies, real estate prices dropped 30 -40 percent in the downturn period, a rarely seen decline ever. However, more bases are needed to estimate rock-bottom prices.
According to the land tax tariff in Ha Dong district, a square metre of land on Le Van Luong Street is valued at VND40,000 (inclusive of land clearance and other expenses).
Investors only make a breakeven if they sell the land at VND50 million per square metre. The price on the free market is now also at this rate.
Similarly, a square metre of business land is imposed a tax of VND16 million in Ha Dong. According to developers, construction costs (exclusive of land value) are already at VND17 million per square metre. This means investors will suffer a loss if they sell at VND17 million per square metre.
Thus, selling prices in this area are very reasonable.
Mr Phan Thanh Mai, Secretary General of the Association of Real Estate Vietnam, said promotions and discounts make selling prices verge on investment costs. This is a very good buying opportunity for consumers.
What we see is the signal of market recovery. The price hits rock-bottom. Buyers with handy money have purchased before the rebound. Real estate investment is also growing because investors envisage the attractiveness of this market.
“Together with supporting policies from authorities, the real estate market is believed to sustain its recovery at the end of the year. And, this is the chance for companies with good governance and financial viability and a chance to form a new group of real estate investors,” said Mai.
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