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Last updated: Friday, May 25, 2018


Property Inventory Remains Unknown

Posted: Thursday, March 23, 2017

The Housing and Real Estate Market Management Agency of the Ministry of Construction recently released statistics on the total value of real estate inventory on the market across the country. Accordingly, by the end of February, the total inventory value was about VND29,573 billion, reduced by 76.99 percent (equivalent to VND98,975 billion) compared with Q1 of 2013. This is an impressive number. However, according to many real estate experts, the figures do not reflect the realities of the real estate market in Vietnam.

Inventory of Hanoi and HCM City not equal to one big project
According to the statistics of Housing and Real Estate Market Management Agency, as of February 20, the total inventory was still about VND5,538 billion, down VND1,208 billion or 17.91 percent compared to that of December 2015; down VND52 billion or 0.93 percent compared to December 2015 and down VND27 billion compared to the same period of January 2017.

In Ho Chi Minh City, the total inventory value was about VND5,518 billion, down VND283 billion or 4.88 percent compared to that of 2016, and down by VND105 billion compared to January 2017.

Thus, regarding both Hanoi and Ho Chi Minh City, the total inventory is only more than VND11 trillion. This figure is quite modest compared to ongoing big real estate projects in Hanoi and Ho Chi Minh City with total investment of billions of dollars each.

In the past time, the real estate market has become active again with increase in trading volume in almost all segments, and significant improvement in the liquidity of the market. However, many large projects have been also launched to the market, making the absorption of the market quite good, but in general, according to representatives of some trading floors, the real estate inventory is still quite large. VND11 trillion worth of inventory is not huge. The question is what is the basis for calculating this number? The method of calculating inventory data, and classifying real estate projects as inventory, is the key to understanding these numbers.

To clarify the above concerns of investors, there will inevitably be large discrepancies because it is necessary to distinguish that the inventory is the available product that is not sold or the product in the process of construction.

Mr Tran Khanh Quang, General Director of Viet An Hoa, said that the decreased inventory in the market is understandable because the market has changed; many frozen projects have been re-implemented. Land prices are twice as high as during the crisis in 2007 and 2008. The apartment segment is attracting a lot of attention from the public. Therefore, as the value of real estate increases, the chance to release inventory is higher.

Statistics reflect a small portion of the market
According to Mr Quang, the amount of inventory reduction is a decrease in the amount of goods analysed. Besides, that excludes many new inventories. So statistics need to state what inventory is. Although old goods have been sold out, many new items are still in development. There are many new projects on the market. So, will a new wave of inventory appear?

To make real estate inventory figures meaningful, it is important to define what inventory is and there has to be consistent statistics. For example, which apartment is called inventory and apartments not qualified for sale are considered inventory? All must have a set of standards, there must be independent units to make these statistics, then they will know the exact amount of inventory, output and value, said Quang.

One real estate expert also commented that if inventory is considered unsold goods, statistics from sales units and project developers are needed. But the calculation based on this data is also difficult because no one is in charge of managing problems and there are no resources to test the unfinished products. Therefore, if these products are included, inventory data will be much larger.

According to Mr Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, there are about 500 projects in Ho Chi Minh City that are being shut down for a variety of reasons, many of which are behind schedule due to difficulty in clearance. This is a pretty large number and is the sunken part of the inventory iceberg, and this is the largest proportion of the market. Therefore, the statistics of the Housing and Real Estate Market Management Agency are to be taken for reference only, not reflecting the reality of the market.

Luong Tuan

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