Vietnam Real Estate Market Heats up

 

At the conference themed "Housing Market - Adjustment for Development" held by CBRE in Hanoi August 12, CBRE Vietnam's Executive Director Mr Marc Townsend affirmed: “Some property market fragments are showing good signals and attracting investors to back to the market”.

 

Explaining the slowdown of the realty market, Mr Marc Townsend said that the housing market is now facing a lot of difficulties and challenges at this time due to the slower global economic growth rate, Vietnam's high inflation and bank interest rates, tightened monetary policies, escalating construction material prices, the hesitance of consumers, which have made the market silent.

 

Marc Townsend also noted that the tightened credit policy over the past time has badly affected domestic investors who had been seeking loans for investment and construction, and also those who needed mortgage loans to buy houses. As for people who had demand for buying houses while the prices in the market were unstable, they have just been waiting for better signals. The suspension of housing transactions on the hope that the house price would decrease has also made the realty market inactive.

 

Mr Vuong Tuan Long, Head of CBRE's Business Department, commented that the government's policies have been taking their effects, heading to a healthier property market. The Vietnamese government has made great effort to curb inflation, with the June CPI rate increasing 2.14 per cent against May (the CPI in May was 3.19 per cent. The accumulated consumer price index since the beginning of this year was 17.1 per cent, an increase of 25.1 per cent against the same period last year. The country attracted US$31 billion of foreign direct investment in the first six months of this year, and the figure is expected to surpass US$40 billion by the end of the year. In which, foreign investment capital pumped into the realty market of Vietnam accounted for a large proportion in the total FDI. The stock market has showed the signal of recovery, with the VN-Index reaching over 450.

 

Mr Long said that the economy of Vietnam is on the path of recovery, and will take back its development pace in the near future, which will push the housing prices up. This is a good time for those who have demand for buying houses to realize their dreams. According to Long, there are four reasons to buy houses at this time: "better prices than last year, various choices, easy to supervise the construction progress and verify exactly date of receiving houses, selling prices are anticipated to sharply increase when the market bounces back”.

 

 

According to the assessment of CBRE, the realty market has seen changes in some fragments, and this is a good time for investors to grasp opportunities to succeed. Long took three examples as evidences.

 

The Project N05 invested by Vinaconex in southeast Tran Duy Hung Street was constructed in 2008 and is scheduled to be completed in the first quarter of 2011, with more than 700 apartments with prices of up to VND26 million per square meter. But all apartments have been sold out. The South Korea-invested Keangnam Hanoi Landmark Tower, meanwhile, offers very high price of US$2,700 –US$3,000 per square meter. Among total 900 apartments scheduled to be completed by 2011, more than 100 apartments have been booked. Vuong Tuan Long said that the success of these projects showed that the concept on the central location is getting old. The importance is the convenient transport and infrastructure in these areas, and buyers believe that investors will ensure good construction progress and quality.

 

Other projects such as 15T at Nguyen Thi Dinh of Cau Giay District, which was kicked off by the investor Vinaconex in 2007 and is slated to be finished in the first quarter of 2009, 60 apartments with area of between 80 square meters and 100 square meters have been also sold out at a price of VND18 million/square meter. Vuong Tuan Long said the success of the project is attributed to the investor's policy to offer reasonable-cost houses. Therefore, the investor has built only apartments with moderate areas at reasonable prices, meeting the real demand of medium-income families.

 

CBRE's Business Department Head Vuong Tuan Long pointed out five factors bringing success for investors: reasonable selling prices; good area of 60 -100 square meters; proper payment method; fast construction progress; convenient transport system in the area.

 

Box: According to the statistics from some typical projects in Hanoi, such as Keangnam Hanoi Landmark, Hanoi City Complex, Habico Towers, N05 Tran Duy Hung and 15T Tran Thi Dinh of Vinaconex, Vincom II, these projects will supply about 4,500 apartments to the market from 2008 until 2011, expect for the supply from other projects such as Canal Park - TBN Berjaya (Thach Ban – Long Bien); Gamuda Yen So (Hoang Mai District); west of West Lake new urban area; Hyundai RNC Housing Complex (Ha Dong); and North An Khanh new urban area.