Vietnam - Condominium prices drop due to consumers’ sentiment

The condominium price in HCM City by late 2011 has slipped around 20% compared with the year earlier and over 30% against 2008, Vietnam Investment Review reported.

Did property firms get profits or suffer losses with such a price reduction? The seminar themed “Housing quality and price” was recently held in HCM City to answer the question.

At the event, Le Hoang Chau—Chairman of HCM City Real Estate Association (HoREA) said, some people forecasted that the condominium market segment would decline deeper to the suitable level for which consumers decided to wait for further decreases to buy houses.

“The forecast is the point of view of inexperienced people in condo investment and construction. The above forecast created a very dangerous consequence for realty companies particularly and the whole market generally because only each enterprise is able to define loss or profit of projects”, Chau added.

Being as the experienced construction engineer in HCM City, Nguyen Van Duc—Vice Director of Dat Lanh Co Ltd analyzed that the construction cost for one meter of housing now ranges between 4 million and 7.2 million dong depending on construction method and work quality. But for one project, construction area is only 60-70% so the cost is around 8-10 million dong/sqm, excluding infrastructure investment and other costs.

“We have some condo projects in districts of Tan Binh and 12 being offered at 15-16 million dong per square meter. Probably many companies are suffering huge losses”, Duc shared.

Sharing the opinion, Nguyen Thuy Nhan—General Director of Binh Chanh Construction Investment Co was quoted as saying that the investment cost for project was increasing sharply, especially cost for compensation of ground clearance and only realty company can be aware of loss or profit.

The market now is affected by a lot of factors including customer’s sentiment, Le Huu Nghia—Director of Le Thanh Real Estate Co assessed. The sentiment mostly was made by sales method of enterprises possibly due to financial pressure or a number of various reasons. Sales-off made customers’ think that the property prices could go down further so they are not hasty to buy houses this time.

VietBiz24

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