Although some projects have seen an increase in deals in recent time, the Vietnamese real estate market remains gloomy in general. Inventories are huge and keep rising because more projects are being completed and put into use. But, prices remain exorbitant, well beyond affordability level for most buyers.
Illiquidity
Hyundai Hillstate Project (located in Ha Dong district, Hanoi) invested by South Korea's by Hyundai Corporation still kept up with its investment progress because of abundant financial capacity although Vietnamese investors were struggled to keep pace of investment schedule with insufficient fund available.
Mr Yun Won Han, Administrative Director of Hyundai RNC Ha Tay Ltd, the investor of Hyundai Hillstate project, said, the company managed to sell 30 per cent of apartments after the project completed even though its infrastructure is synchronous and utility services are relatively perfect.
Like Hillstate Hyundai project, many high-end projects in the capital city of Hanoi do not have many buyers because investors have launched a variety of promotion programmes. Many public-interested projects have to accept price cuts to boost sales. Many apartments have lowered selling prices to VND1.4-1.5 billion from VND2 billion previously but sales remain sluggish. Typical examples include Mandarin Garden project invested by Golden Gain Vietnam Joint Stock Company (a member of Hoa Phat Group), Mulberry Lane project invested by Hoan Thanh Company, and Spark project invested by Nam Cuong Group.
In many projects, prices have been slashed by 30-40 per cent since the market reached its climax but buyers still lack interest. Some buyers expect lower prices. Strong promotion programmes of incomplete, slowing projects are cementing their confidence of further price drops in the coming time. Due to financial strains, many investors have broken their contracts and commitments to their customers, slowed down their projects, and even constituted advance capital of customers. Typically, many buyers lost their deposits, worth of VND400 billion (nearly US$20 million), in luxury Tricon Tower when its investor, Edward Chi, disappeared when the project was in the first stage of construction.
Mr Nguyen Huu Cuong, Chairman of Hanoi real estate Club, said the public confidence in the property market is eroding, especially after many projects broke their commitments to their customers. This has led the property market to slide more deeply into crisis. Investor arrests, frauds denounced by customers and asset appropriation, are reflecting the flip side of property market.
Prices are sky high
As the real estate market is still in difficulty and the customer confidence is weakened, finding new customers will be more and more difficult, especially for high-end real estate projects. With selling prices unaffordable to most buyers, upmarket apartments are more difficult than ever. Many high-grade condo projects do not have any price cut. Steep price reductions are seen in projects placed under high pressure of bank loan repayment.
The 77-ha Park City project, despite being built since 2010, has only two high-rise buildings under construction but its villa and semidetached house areas still untouched. However, the investor is showing no sign of lowering selling prices to boost demand.
Started in 2009, Thang Long Mansion project, a luxury apartment in a prime in Hanoi (Le Duc Tho Road, Tu Liem district), has been halted since the construction reached the 7th floor and has no sign of construction resumption. Currently, the investor is still offering VND38 million per square metre, almost unchanged from two years ago when it opened selling.
According to a real estate exchange on Le Van Luong Street, Hanoi, compared with completed and nearly-completed projects, these projects will face more difficulties in seeking new customers. For sluggish projects, current prices are not enough to simulate the demand and liquidity is thus almost unimproved.
Luong Tuan
Vietnamese
