Real estate developers' myopic focus on rich homebuyers has virtually
ruined the Ho Chi Minh property market by shunning the low-income segment,
where demand is highest, according to a city investment official.
Thai Van Re, director of the
city’s planning and investment department, was quoted by news website VnExpress
as saying that developers should have built affordable homes instead of wasting
money developing projects for the middle and high income segment, in which
supply already far outweighs demand.
“Even though this is the
developers' decision to make, I still think they should reconsider their
business strategy. It’s not right to build apartments that they can't sell even
after cutting prices,” he told a meeting with representatives from the
municipal People's Council, which acts as the city's local legislature.
Le Manh Ha, vice chairman of the
Ho Chi Minh City People’s Committee, said home prices have to be cut to as low
as possible to stir up demand. Ha said that in order to do so, developers
should stop competing against each other by offering exceedingly high land
prices to secure good sites for their projects.
Property brokerage Knight Frank
said in a report last week that despite the continuing positive signs in the
economy recently, with inflation appearing well under control and lower
interest rates, the real estate market in Ho Chi Minh City continues to
stagnate.
“A lack of liquidity and
difficulties obtaining credit from the financial institutions continues to be
the major hurdle for potential home buyers and developers alike,” the report
said.
"The limited credit
available to the real estate sector from the banks has continued to hinder
development activity and has culminated in the banks with available funds,
generally only providing credit to well located, high quality projects."
Knight Frank also said that while
investors are still active in the market, they are constantly hampered by
“unrealistic asking prices and complicated ownership structures.”
Thanh Nien
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