Hanoi, with a population of seven million and a growing number immigrants, is suffering overloading in many markets, especially lodging. House and land prices in the capital city are still expensive, even though the market is rather quiet at present.
At the forum "Hanoi real estate: Opportunities and challenges" held by the Ministry of Construction in coordination with the Vietnam Chamber of Commerce and Industry (VCCI) on July 27, 2010, managers, enterprises and specialists analysed the Hanoi real estate market and anticipated strong movement in the coming time.
Rampant speculationDeputy Construction Minister Nguyen Tran Nam said property prices are still very high and the market is volatile. The Ho Chi Minh City real estate market is better than Hanoi at least in these two aspects, he said.
Housing demand is urgent but it is hard to find a house still listed at its original price. An official said people in Hanoi cannot purchase houses at their original prices because of excessive demand. When Nam Cuong Group released information on houses for sale, thousands of people queued for the chance to buy one at the original price. Supply is getting thinner as hundreds of projects are delayed. The excessive demand and lack of good information create opportunity for price gauging. In fact, houses go through many hands before reaching end-buyers.
Mr Nguyen Khac Tho, Deputy Director of the Hanoi Department of Construction, affirmed that the Hanoi real estate market in recent years has evolved in ways authorities have not kept up with. He said the primary cause is the dealings of speculators and investors. The market is frequently driven by unrealistic trading prices or rumours which are aimed at sending up selling prices. In the first and second quarters of 2010, land prices climbed some 30 percent on average and several districts witnessed a surge of 40 percent plus. According to the Hanoi Taxation Department, in the first five months of 2010, land taxes collected in Quoc Oai, Thuong Tin, Ba Vi and Thach That soared to over VND700 billion.
The many delayed projects and short supply amid soaring demand also leads to high prices. Dr Nguyen Van Minh, General Secretary of the Vietnam Real Estate Association, said that after Hanoi expanded its administrative area (merged with Ha Tay province and small parts of Hoa Binh and Vinh Phuc provinces), the review of more than 700 property investment projects and plans went behind schedule. Even now, only the first phase of the review work has been announced. Reportedly, some projects remain inactive 3-4 years after investors obtained the licences. Property market development is very important, but it has not been completed after three mayor tenures. Furthermore, detailed plans are usually adjusted. For instance, the plan for southwest Tran Duy Hung Street has been revised three times and the planned zone of 100 golden villas will be used for high-rise buildings.
At this time, southern customers can buy houses at original prices, or even with a few percentage point discounts that make real payment value lower than original prices, while in Hanoi, although the market is rather quiet, customers are unlikely to purchase houses at original prices. Real estate companies in the north do not have the habit of marketing their products, as it is not necessary for them.
Is the northern market likely to be slowly dominated by southern companies?Many southern property firms have attracted Hanoi residents to buy real estate in southern regions. Several southern companies even have plans to develop projects in northern regions. According to Deputy Construction Minister Nguyen Tran Nam, Ho Chi Minh City-based companies are active in not only choosing proper market segments affordable for a majority of customers, but also in expanding their business presence, not only to surrounding markets but also to northern regions. “Dat Xanh Real Estate Service & Construction Corporation has set up a company in Hanoi and it will be followed by others like Sacomreal and Vinaland. This shows a north-reaching trend by southern property firms. This will be a chance for northern buyers, but a challenge for Hanoi investors,” Nam said.
Several Ho Chi Minh City-based real estate companies have opened representative offices or property transaction floors, like HimLam Land and Dat Xanh, to provide project information for northern customers. In mid-May, the Him Lam Riverside project was officially introduced to northern customers. In mid-April, Thach Ban Joint Stock Company and Lien Viet Holdings Joint Stock Company signed a cooperation agreement to develop “Him Lam -Thach Ban Master Urban Zone.”
Hanoi real estate companies have to face a post-fever quiet in the apartment market and compete with southern enterprises. Northern companies, except for those rising from State-owned enterprises, are not big names on the real estate market, while many southern private-run companies are already giant players like Hoang Anh Gia Lai, Quoc Cung Gia Lai and Phu Long. Hanoi companies have not been familiar with the market regime in property distribution and they are not equals to southern players who have worked under the market regime for a long time.
General Secretary of the Vietnam Real Estate Association Nguyen Van Minh said Ho Chi Minh City-based real estate companies are more professional than their northern counterparts in many aspects. Therefore, with their experience, Hanoi will be a target market for them when southern markets show signs of saturation.
Le Minh
Vietnamese
