Finding a Path for Real Estate Market

 Real estate investors themselves know that the money of the people is still abundant, which is the very fuze to stimulate the demand of real estate market in Vietnam. But how to unfreeze that money in the context that most of the investors are in a state of "capital hunger" is not a simple task at all.

 

Now that the number of unsold apartments in Hanoi and HCMC market has reached hundreds of thousands of units while the apartments offered at less than US$1 million are arousing great interest to a large number of customers. According to the Ministry of Construction, at this stage, if investors can exploit well the segment of apartments at less then VND1 million, the difficulty in market capital is believed to be properly removed.

 

According to the statistics, currently, there is a backlog of about 100,000 apartments with area ranging mainly from 70m2 to140m2 in HCMC market. The situation in Hanoi is even worse with hundreds of thousands of apartments mainly belonging to the captained projects namely Nam Cuong, Galeximco, South Anh Khanh, North An Khanh... These apartments are priced from VND30 million to VND45 million per m2. According to the forecast of Colliers International real estate company, in next 03 years, the apartment market in Hanoi will have at least more 70,000 units, which is believed to put more pressure on the supply and the more likelihood of price decrease.

 

In 2010, when the real estate market was still in prosperous period, the market was completely in the hands of secondary investors and project owners, the transfer amongst speculators pushed the market price to the rate higher than its real value. And only when this is no longer effective, the investors can realize that it is the customers who have real demand for housing that is the source of market nourishment. There have been many proposed solutions to rescue the real estate market as "open credit valves". However, according to Mr Dang Hung Vo, a real estate expert, credit solution is not a sustainable solution. He advised that working out the ways to mobilize capital is our long-term and sustainable solution.

 

According to the representatives of many real estate trading centres, the customers with the real demand for housing are only interested in small apartment segment with the price under US$1 billion/unit. It is therefore obvious that the market is not completely frozen and there are still chances for investors. The real estate still stays alive if businesses can churn out products that can well meet the customers’ need.

 

The most outstanding illustration is Dai Thanh project in Ha Dong, Hanoi. For less than six months, as many as 1,800 apartments in 3 buildings have been sold. In September, the project owner continues to design the project building No. 4 with a total of about 600 apartments. With an average selling price of 14 million per m2 and an area of ​​38-70m2, such designed apartments are deemed suitable for families with actual accommodation need.

 

The fact shows that the demand for cheap apartments in the range of 15 - 25 million per m2 is still great especially in the areas close to the center as Thanh Xuan, Cau Giay District, Hai Ba Trung...

 

Foreseeing this demand, over the past time, many investors in Ho Chi Minh City has spitted large flats into smaller apartments to meet the needs of most customers. Especially when the segment of penthouses got frozen completely, a number of projects have applied for permission to split large apartments into standard ones.

 

The real estate businesses’ grasping of the market demand has not been highly appreciated during the past time. However, there seems to be a start of a change in perception with an increasing number of feasible projects. The affordable apartments with reasonable price are now being paid more attention by real estate businesses. With the market changes, real estate experts assume that in the next five years it is necessary to lay focus on the segment of small apartments so as to meet the needs of homebuyers including the single and families. Most recently, the banks has constantly launched support packages with preferential interest rates for the credit agreement with the purpose of buying houses, especially in the real estate projects of cooperation with banks to assist the customers in mobilizing fund. This will help excite the psychology of potential customers to own real estate products with affordable price.

 

Being able to meet the real needs of most people is the most effective way which can ensure the success and sustainability for the real estate businesses today.

According to market research companies, the real estate market will continue to be on the long-term downtrend in the next three years. This will be the basis for businesses operating in the field of real estate to work out and develop policy in a reasonable way, offering products suitable to the needs of the people. This is considered the outlet for the real estate project today rather than reliance on credit leverage or change in state policy. That is the message shared by the leaders of real estate consulting firm and international experts in this difficult period.