Different from previous years, the real estate market of Vietnam in early days of 2011 has started to speed up. Strong participation of investors has boosted the price of real estate day by day. However, realty experts still make skeptical judgment on sustainable development of this market.
According to many realty experts, the sudden increase in the price of many segments of realty market does not truly reflect the reality of this market, since under pressure of monetary policy tightening and new regulations in managing master planning and land, investors cannot overcome psychological obstacles promptly to make massive investment as what is going on.
Real estate enterprises will encounter many difficulties
At this time, financial and fiscal policies are very sensitive. As such, many real estate experts believe that those who have demand for realty investment will not immediately pump money but hold on and investigate further information since the realty market has been on an upward trend continuously. A new price platform has been established. The market will, therefore, come to a standstill at any time.
Mr Nguyen Van Kha, Chairman of Board of Management of Tu Liem Housing Development JSC, states that in the first six months of 2011, under influence of the monetary policy, the market will not be much bright. In the second half of the year, when economic situation has got stabilized, only when enterprises really escape recession, does the market have new development steps.
Especially concerned about influence of finance policy on the real estate market, Mr Nguyen Tri Dung, Chairman of Board of Management of Song Da Thang Long JSC, thinks that finance policies exert direct impact on operation of the realty market. Meanwhile, Vietnam’s finance policies keep changing, which makes it impossible for enterprises to foresee. Mr Dung believes that Vietnam’s enterprises are currently facing heaps of obstacles. State Bank’s decision to raise exchange rate results in price acceleration of series of construction materials, which makes quite a few enterprises afflicted.
Another issue which is reflected by many property enterprises is policy on site clearance. It is inconsistency in the implementation of such policies that causes difficulties for enterprises in calculating the compensation cost for site clearance. The compensation cost gets higher and higher compared to that of previous years, which makes it hard for enterprises to implement the policy even in the same project.
Representative of Dabaco Real Estate JSC thinks that almost all enterprises operating in real estate sector of Vietnam are of small scale and their potentiality is not really strong. Therefore, when they are strongly affected by finance policies, their ability to cope will weaken. In such situation, enterprises have to save themselves first before standing still and waiting for changes in policies. Finding a good flow for their cash is becoming a top priority of realty investors.
Many obstacles for small investors
In nearly two recent years, the real estate market of Ho Chi Minh City has fallen into a situation in which supply exceeds demand due to massive and unorganised investment. Quite a few investors are concerned that a very large number of projects will be launched in the property market of Hanoi. Competition will be very tough by then. At the same time, those with demand for housing will have more choices at more appropriate prices.
According to real estate experts, the demand exceeding will be observed more clearly when projects in the used-to-be called Ha Tay province get approved and implemented in coming time.
During the past years, investment in real estate sector has always drawn attention and participation of many people because of its profit rate. However, when the market is getting saturated, the profit rate from investment in this sector will not be as expected.
In current circumstance, high price, high lending interest rates and exchange rate gap being extended more and more together with issuance of more and more regulations on tightening the market are discouraging investors. Another reason which makes a large majority of investors step out of the market and wait for further information lies in the fact that the master plan of the capital has not been approved by the Prime Minister.
When the master plan of Hanoi is approved, many projects will have to be adjusted and inappropriate projects will be crossed out. In order to avoid unnecessary risks, experienced investors will not risk making investment at this time.
However, investing in the property market does not mean loss-making though the profit rate is not as high as that of previous years. This is also an appealing time when many people still want to pump their capital into this sector.
Luong Tuan
Vietnamese
