11:27:02 PM | 29/10/2013
The real estate markets in Hanoi and Ho Chi Minh City are facing many similar difficulties and the businesses operating in this sector are on a diminishing belief, but the two localities have different approaches.
Ho Chi Minh City focuses on handling inventory
In Ho Chi Minh City, the inventory has been increasing with almost no significant improvement in the output. According to statistics, since the beginning of this year, the real estate business has sold 4,437/14,490 apartments (accounting for 30.62 percent of the total inventory of apartments from late 2012 to present), the number of remaining inventory equivalent to about VND17,663.42 billion. There remain many difficulties, so to overcome them, many real estate companies in Ho Chi Minh City have accepted losing profits.
Currently the price of the average apartment has dropped by 10-20 percent, the price of high-end apartments decreased by 40-50 percent. According to the experts forecast, the current price is not the bottom price of the market. In the current difficult situation, apartment segment is under the strongest pressure, currently, projects of Phat Dat Real Estate Corporation of the Novaland have been reduced by 50 percent compared to the peak period. Vincom Corporation, to enhance liquidity for high-end real estate projects, launched many forms of promotion such as building more utility for residents, offering 10 years of free services.
According to CB Richard Ellis, apartment prices continue to fall sharply on the secondary market and high-end market; all these factors are making buyers more confident when house prices are slowly returning to its true value.
Assessing the current situation, Mr Tran Trong Tuan, Director of Ho Chi Minh City Department of Construction said that flat inventory creates a huge pressure on investors, forcing them to adjust the price or offer promotions to boost consumer demand.
Mr Nguyen Van Duc, Director of Dat Lanh Real Estate Company, said "Discounts for completed apartments are good for buyers, but on the contrary, discounts for apartments being started to build is very risky for buyers because nobody wants to suffer losses."
While the market still faces many difficulties, despite lower prices for two consecutive years, buyers and sellers remain a far distance and the package of VND30,000 billion of supporting credit for low-income people to buy social house still have many problems which leads to a few number of buyers accessing these funds. By the end of August 2013, the country had only 331 credit borrowers, equivalent to VND105 billion.
In Ho Chi Minh City, by September, there were 51 buyers getting the loans of VND71.2 billion. However, until now, there are only 18 official customers with total loans of VND5.93 billion. Besides, there are 3 investors to register borrowing loan with total registered capital is VND762 billion.
Given the problems of the real estate market, many experts believe that the market will continue to decline in the near future. "With the developments of the market between now and 2014, we can not use the word "prosper" for the market. Currently, in the real estate market, some businesses fled away and sold the project. In the next time, the real estate market may fail down rather than the domino break down. To recover, the market may still need a strong decline in price again," Mr Duc said.
The North continues to launch new products
While the real estate businesses in Ho Chi Minh City are concentrated in solving the inventory, Hanoi market, from early September until now, has been constantly launching a series of real estate projects.
Recently, Dat Xanh Real Estate Trading Service Corporation has offered products of Xuan Phuong project (Viglacera), Coma 18 Corporation has adjusted their selling prices of apartments in Westa project (Ha Dong) and Lai Chau No. 1 Construction company has also completed Dai Thanh, Kim Van Kim Lu, VP5 Linh Dam projects.
Recently, the public is very excited that a mansion may cost only a few hundred million VND. For a villa with an area of 350 - 400m2, located adjacent to a series of eco- resorts and golf courses, it costs VND600 million for the land and less than about VND200 million to build a 80m2 villa.
Prof. Dang Hung Vo said that prices of property in general and eco-property in particular always increase when there is high demand and social infrastructure develops. In addition, eco-real estate products have stable development cycle, virtually no bubbles or virtual prices. The reason is that customers of this segment have practical needs and this segment is still in the development phase so the speculators hardly use these tricks to create virtual prices. The eco real estate market will have advantages when the real estate market is quiet. Because the secondary investors and customers have time to considering and choosing the positive value of the eco real estate market in the current phase.