Vietnam’s real estate market is in a funk so bad that
several drops in prices have not brought any cheer to buyers.
According to the Ho Chi Minh
City Real Estate Association, with home prices falling continuously, many
buyers are adopting a wait-and-see approach, hoping prices would drop further.
This is a “dangerous” situation
for the real estate market, signaling an even more difficult year ahead for
developers, the association said.
Some companies may resort to
lowering prices to boost sales before it’s too late, it added.
Nguyen Van Duc, the association’s
vice chairman, said not a single real estate firm is earning profit at this
point. Developers have no choice but to accept losses and try to survive these
times, he said.
But the association warned that
cutting prices is not an easy task.
Chairman Le Hoang Chau said
home prices in Vietnam have been high because of high construction and
borrowing costs as well as the large amount of money developers have to spend
on land clearance and land use rights.
Then, it also takes a long time
to go through all the administrative procedures, causing the total cost to
surge further, he said.
Analysts say Vietnam’s property
market has gone through one of its worst years. Some say the credit squeeze
imposed on the sector throughout most of 2011 has left developers and
homebuyers struggling financially. Others blame the ongoing slump on an
oversupply of luxury and overpriced products that failed to meet the real
demand of most Vietnamese buyers.
The housing markets in both
Hanoi and HCMC will continue to see price falls in 2012, according to global
property consultant Knight Frank. Residential prices in the two Vietnamese
cities will fall by 5 to 10 percent in 2012, after an estimated drop of 10-20
percent in 2011, the company said in a global forecast earlier this month.
Not only developers but
investors who try to earn profit from buying and reselling properties have been
left high and dry by the market downturn.
An investor in Hanoi who wished
to remain unnamed said she had paid 80 percent of a luxury apartment but she
could not find money to pay the rest.
“I was stuck. I had to sell it
at VND20 million per square meter even though I paid VND20.5 million in the first
place,” she told Thanh Nien.
Many other investors, unable to
access bank loans, faced the same situation. But even with price cuts of recent
months, buyers are still shying away.
Pham Thanh Hung, deputy general
director of Century Group, a real estate services provider, said there were
many reasons why people were deciding to sell their properties at very low
prices, including lack of confidence in the market and high taxes. But most of
all, it was because they no longer see real estate as a lucrative investment
channel and want to consider other options, he said.
Real estate prices can continue
to fall, Hung said, adding that prices will reach a level that is more
reasonable to homebuyers.
The director of a major bank in
Hanoi said his bank will sharply reduce credit to real estate and focus on
export and production sectors.
“If we continue to offer real
estate loans, the procedures will be tightened up and interest rates will be
higher,” he said. “We need to change our business strategy because it will be
tough for the property market in 2012.”
A senior executive at Agribank
also believed the real estate market would not be able to pick up any time
soon.
“The market can start heating
up only when the economy expands at a fast pace. But now the government has
decided to go with a reasonable GDP growth, if not a lower growth than many
past years, in order to restore economic stability,” he said.
“As a result, it’s unlikely the
real estate market can recover in 2012,” he told Thanh Nien.
By Anh Vu - Mai Vong, Thanh
Nien News (The story can be found in the December 30th issue of our print
edition, Thanh Nien Weekly)
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