Small Apartments - Big Gains

According to officials from the Ministry of Construction, the reason for soaring housing prices is short supply. Beyond that, prices for end-buyers multiplied as each apartment has been transferred to new owners several times. Paradoxically, many investors cannot find buyers for their apartments because not many people can afford an apartment worth of billions of Vietnamese dong. Deputy Construction Minister Nguyen Tran Nam said the most effective solution is to narrow the gap of supply and demand. Besides, investors and purchasers need to get into the habit of conducting open negotiations via true transaction floors.

 

According to statistics, although the supply is quite abundant in Ho Chi Minh City, the largest economic hub in Vietnam, prices have risen more slowly than in Hanoi. Many southern investors have had to launch promotion programmes to sell their products. The larger supply in HCM City is attributed to the more friendly State management regime which encourages more private enterprises to jump into this potential industry. On the other hand, HCM City-based businesses are also very dynamic and creative, adapting to satisfy the practical demands of the market. They have quickly shifted their investment in two directions: Investing in low-end apartments (priced at some VND10 million per square metre) to serve the majority of customers and are expanding their business presence to surrounding localities like Binh Duong and Dong Nai, and even to northern localities like Hanoi. Small, reasonably priced apartments promise to bring huge benefits for investors in the future.

 

Deputy Minister Nguyen Tran Nam said: “With the current level of income, real estate companies should focus on medium projects featuring reasonable prices. Apartments with an average price of US$1,000/ 1 sq.m downwards is affordable for the majority. In fact, not many people can afford upmarket apartments, while a great number of people have unemployed cash valued at hundreds of millions of Vietnamese dong. Thus, enterprises should design investments to mobilise capital from this segment of the population. At present, the Government is attaching much importance to developing low-end houses and student hostels. Hence, in the future, the Government will take part in the real estate market as an investor. In the next two or three years, the supply will rise significantly.”

 

To stabilise the real estate market in the coming time, Hanoi needs to complete its construction planning. At the same time, the city also needs to review legal regulations on land and housing to provide detailed definitions for transfer conditions for perennial plant areas, forestland and gardens attached to residences. Besides, it needs to strengthen oversight of land transfers and seriously crack down on violators of land and housing regulations.

 

Some property experts pointed out that ongoing traffic routes will link Hanoi downtown with surrounding urban zones. Travel will be easier and property markets in outlying areas will be more active. Furthermore, with strict definitions in Decree 71/2010/ND-CP issued by the Government, in the future, real estate trading activities will be more favourable and transparent to ensure the legitimate rights and interests of both buyers and sellers.