HANOI, HCMC – Many local homebuyers over the past time
have wondered if prices of apartments in the future will continue going down or
not but they still have yet to find out the reply. Even housing developers
differ over an agreeable level.
Many people believe that housing
project owners are enjoying hefty profits and they insist that housing prices
be lowered further. On the contrary, many others say it is impossible to assess
the whole realty market via a number of discounted schemes as different housing
projects target different segments with different investment rates.
Price cuts on low input costs
A large number of project owners have
been cutting prices for their condos over the past time, which is made possible
owing to their low input costs.
For instance, the Dai Thanh condo
project developed by Private Construction Enterprise No. 1 Lai Chau is offered
at VND10 million a square meter. However, other industry insiders affirmed that
it is hard to make profits when developing a condo building with such a low
price at this time.
Regarding the issue,
representative of the Dai Thanh project developer explained that they was able
to fix the price of VND10 million for one square meter as they had their own
capital available and did not rely on bank loans.
Another advantage, according to
the representative, is that the firm has land source available from 2008 when
the land’s price was not so expensive.
Specially, the representative
noted that thanks to over 30 years of experiences in the construction industry,
the developer has subsidiaries in charge of all related processes helping it
minimize expenses for the project.
“With the three advantages, we
are completely able to earn profits when pulling the housing price down to
VND10 million a square meter,” he asserted.
In the south, Hoang Anh Gia Lai
Group also sent shock waves to the local housing market by launching the sale
of discounted apartment projects. The group also had the same explanation as
the aforesaid company about its sales, comprising the factors of low-value land
sources and contribution of member enterprises from material supply to project
designing and execution.
Balance between prices and quality
Nguyen Quoc Hiep, chairman and
general director of Global Petroleum Investment Corporation (GP Invest), said
it is wrong to equate all apartment projects of different levels to the same
selling price. It is because each project is designed for a different market
segment, he reasoned.
At a dialogue on the 2013
prospects of the real estate market in Hanoi last week, Hiep expressed his
disagreement about the idea of certain companies active in the property sector
saying the price of VND10 million per square meter is the real value of
apartments at home.
The basic construction of an
mid-end apartment building alone cost a developer up to some VND8 million a
square meter, Hiep clarified. If other expenses are included, such as the
coefficient rate of land use and infrastructure development expenses, the cost
for one square meter will be about VND14 million, he said.
In the context of the current
slackened housing demand, wise property enterprises should recoup investment
capital by minimizing their profit margins, Hiep added.
In the meantime, Nguyen Van Duc,
deputy director of Dat Lanh Real Estate Co., said the fact that local housing
developers slash selling prices should not be considered an act of
undercutting. This is a business strategy of industry players only, he said.
A lot of companies accepted
losses to recover investment capital instead of keeping rising inventories, Duc
said. Low-cost housing schemes in recent times all belong to companies
specializing in the construction area, such as the Ehome project of Nam Long
Investment Corp. or the Tan Mai project of Tan Binh Investment and Construction
Corporation, he added.
Thoa Nguyen and Nhu Ngoc - The
Saigon Times Daily
Business & Investment Opportunities
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