Vietnam - Prices of apartments and villas fall in Hanoi and HCM City

In the first quarter of this year, the prices of apartments and villas in Hanoi fell by 10-15 percent over the previous quarter, while in HCM City market the reduction was lower, about 10 percent.

Due to the real estate market slumped, many investors had to give incentives, promotions and payment extension to stimulate demand.

Prices of villas and adjacent houses in Hanoi and HCM City dropped sharply, from 4 percent to 15 percent over the previous quarter. In Hanoi, a series of projects saw discounts of up to 15 percent such as Kim Chung Di Trach project at 22-32 million dong per m2. The North of Highway No 32 project also saw an average reduction to 30-35 million dong per m2, Duong Noi project at 36-40 million dong, Gleximco at 38-42 million dong and Van Khe project at only 70 million dong per m2 including both crude construction and completion.

CBRE Vietnam's research said that in the first three months, the prices of villas and adjacent houses in urban areas decreased by 5-15 percent from the previous quarter. In comparison with the second quarter 2011, when real estate market was witnessing a fever, the fall in many projects was up to 25 percent or even at 30 percent.

Savills also confirmed that the prices of villas and adjacent houses tended to fall throughout the districts in Hanoi. Districts of Cau Giay, Tay Ho and Tu Liem have the highest secondary offering price, at over 120 million dong per m2. The outlying districts such as Me Linh, Quoc Oai, and Dan Phuong have the lowest secondary offering price, at less than 40 million dong per m2.

The average offering price of an adjacent house or villa is ranging between 2.6 billion dong and 41.4 billion dong per unit. Districts of Quoc Oai and Dan Phuong saw biggest drops of up to 17 percent over the previous quarter.

In HCM City, in the secondary market, investors also reduced prices of villas, adjacent houses and land for capital recovery. In the first week of April, some land plots covering area of 86-160 m2 at Street No 17, Linh Trung Ward, Thu Duc district were offering at four million dong per m2, while the lowest common price of this area was at six million dong per m2 and the highest was up to 11-12 million dong per m2. Many villas and adjacent houses in districts of 9, Thu Duc, Nha Be saw also average discount of 5 percent.

The average offering prices of villas and adjacent houses in HCM City in the secondary market decreased 7 percent from the previous quarter and the price of ground land also declined. Except districts, of 2 and 9 with stable prices in comparison with the same period last year, the average land price in other districts fell by 3-25 percent.

Similarly, in villa market, a series of apartments in the north and south saw direct or indirect falls via promotions. In the end of March and early April, together with direct discounts, some investors promoted supports for the buyers via rescheduling the payment duration, loan assistance and preferential interest rates.

Particularly, in HCM City, Thu Duc House Co gave incentives to the buyers of Truong Tho apartment project whereby with a payment of only 50 percent of the apartment value, the buyer will receive a completed house together with a discount of 5 percent.

Likewise, for Quang Thai apartment project, when customers pay 95 percent of the apartment value, the investor will immediately give a discount of 12 percent on the selling price.

Meanwhile, at Ngoc Lan apartment project in district 7, HCM City, the offering price is also slipping slightly. The offering price in early second quarter 2012 was 14.9 million dong per m2 depending on locations, down 11-14 percent against the offering prices in the end of 2011. Together with discount, the apartment purchasers have to pay only 55 percent of the apartment value and the rest will be deferred for one year without interest rate or they will be supported in accessing bank loans.

In Hanoi, the investor of Golden Land project will also donate car to apartment buyers while the investor of Daewoo Cleve project joined hands with banks to give preferential interest rate of 12 percent per year and customers will be allowed to borrow capital in phase 2 and phase 4 with total amount of equalling to 25 percent of the apartment value. Sky Garden project (Dinh Cong) also gave a discount of 10 percent when the apartment buyers pay 80 percent of the house value.

CBRE Vietnam's report said, in Q1/2012 all segments of apartments in HCM City saw drops in prices in the secondary market price. In particular, luxury apartment price decreased 4 percent, high-class apartment price fell by 2.4 percent, popular and medium housing prices were also down 1.1 percent from the previous quarter. In addition, CBRE's statistics also showed that there was no new supply of apartments in the luxury and high-class segments.

In Hanoi, Savills said the fall in prices was seen in all districts. In particular, districts of Ha Dong and Hoang Mai saw the strongest decreases of about 10 percent over the previous quarter.

Richard Leech, Managing Director of CBRE, said prices of all segments of apartments decreased but the luxury apartments posted the biggest drops, according to Richard, because a majority of investors recovered capital so they quickly withdrew from the market. "Investors are difficult to find buyers, therefore, they are forced to give discounts" Richard said.

VietBiz24

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