Real Estate Closer to Real Value

 

Mr Vu Xuan Thien, Deputy Director of Housing and Real Estate Market Administration Agency under the Ministry of Construction, used to impress the audience with his expression “If I have money now, I will buy a house right away.” He said although there are no official groundwork to have an exact assessment, all expects the market will revamp this year because banks have slashed lending rates and some even open the valve of credit flows for real estate market. The Ministry of Construction signed a ‘in principle’ contract with the State-run Bank for Investment and Development of Vietnam (BIDV) to apply 14 percent interest rate on real estate loans. This is also an opportunity for the market to develop in the last months of this year.

 

But, many cast doubts over the remark by authorities or project investors that this is the bottom of the market because they simply think that it aims at stimulating the demand because the long decline is leaving growing pressures not only on property companies but also banks and the entire economy. However, settle-down is one of the most important jobs that Vietnamese people want to be done first in life. All desires to own a house. Previously, land and house prices skyrocketed and profits from property investments were envied by outsiders. As banks have begun loosening borrowing conditions for homebuyers and slashing interest rates, the confidence in the real estate market recovery is not a pipe dream.

 

Recently, Knight Frank, an integrated global real estate advisory firm, released a report on property market in the last months of 2012. It said with strict gold trading management, lowering deposit interest rates, and falling profits from stock investments, driving forces are being redirected and the target is referred to property market. Research by Knight Frank explains reasons for the lack of stability, the loss of confidence in real estate market, substantial losses incurred by businesses and individuals. And, when the confidence in the real estate market was lost, they sought other safe investment channels instead. That is why there is a lot of positive news like stock market recovery, inflation easing and falling interest rates but the property market remains quiet thus far.

 

Currently, many banks have soft credit packages for homebuyers or join hands with project developers to lend buyers. Vietcombank announced to lend VND2,000 billion to individuals, with an annual rate of 13 percent for trading houses and the rate of 14 percent for buying, repairing houses. Vietnam International Bank (VIB) set aside VND1,000 billion for home loans, with an interest rate of 14.2 percent in the first three months, a maturity of 180 months and lending value at 90 percent of home value. Lower rates are also seen in some banks but criteria are more selective. For example, BIDV offered an extremely attractive rate of 10 percent per annum for buyers in some projects. SeABank introduced 11.99 percent rate for buyers in Berriver Long Bien project with the term reaching 20 years.

 

Meanwhile, apartment prices have plunged over the past three years. Now, customers do not have to wait to buy houses as they used to. Indeed, it is unrealistic to see land and house prices to return to real value affordable for most people. House and land prices are very far from incomes of most people. Hence, this is a good time for people to buy house and land to invest for a profit or simply improve accommodation.

 

Banks and project investors are seeking together to introduce financial support packages for home buyers because they understand this is a less risky lending option than funding investment projects with a huge value in the context of slow sales. Apart from a long borrowing term of 15-20 years, many investors subsidise interest rates for customers. This is a wise choice because they do not lose ground to buyers.

 

In the past few months, more affordable housing projects have been launched. In Hanoi, it was impossible to find an apartment priced below VND1 billion, except for a mini flat, but the price of VND1 billion is now becoming a trending benchmark. In early June, the market witnessed a hot fever in Dai Thanh apartment project in Ha Dong district, invested by a private company in Dien Bien province. Apartments with a usable area of 42.1 - 66 square metres were offered at VND14 - 14.7 million per square metres (inclusive of VAT and 2 percent maintenance fee). A unit is priced VND600-900 million. In the west of Hanoi - the cradle of many property fevers in the past years, Tan Viet Tower project, invested by Tan Viet Investment and Construction Joint Stock Company in Duc Thuong commune, Hoai Duc district, quoted selling price of VND14 - 14.7 million per square metre for its apartments, with a usable area of 78.05 - 115.75 square metres. Not far from Tan Viet Tower is Tay Tay Do condominium which offers to sell apartments at VND15.3 million per square metre. An Binh Tower, nearer towards Hanoi downtown, announced to sell at VND15 million per square metre but many dealers advertised to sell at just VND14.2 million for two area options, 85 square metres and 100 square metres . The final price is ranging from VND1.2 to VND1.5 billion.

 

Affordable apartments, typically small, touched the demand of young families struggling to rent houses in big cities.

 

Besides, some upmarket apartments come to the market and investors are confident to sell well because they are ready to give incentives to buyers.

 

Indochina Land has cooperated with Savills Vietnam to organised an event to offer sales of Indochina Plaza Hanoi apartment complex which consists of two apartment towers with 386 luxury units, 18,000 square metres of Grade A office space, and four-storey commercial centre. Golden Palace, invested by Mai Linh Company in Me Tri Road, Tu Liem district, was also offered for sale. Areas, interiors and other facilities are customised. The price is from VND27 million per square meter.

 

This month, Savills Vietnam announced to sell Tay Ho Residence apartment complex comprising of four towers of 15 - 27 floors. A unit area ranges from 58 to 125 square metres. Hanoi Construction Investment Joint Stock Company No. 9 cooperated with Knight Frank to open sale of N03 central tower of Berriver Long Bien project.

 

High-class condos compete in marketing and support for customers. Many investors support 6 - 9 percent interest rate in first 6 - 12 months. Even, Golden Land invested by Hung Viet Trade Joint Stock Company wholly subsidised interest rates for customers’ bank loans which amount to 70 percent of apartment value.