VietNam Business: Real Estate

Showing posts with label Real Estate. Show all posts

Friday, February 18, 2011

Confab examines new housing policies

by Xuan Huong

A new apartment building in Phu My Hung Area in HCM City. New housing policies on residential real-estate transactions were introduced to housing companies at a conference yesterday. — VNA/VNS Photo Van Khanh

HCM CITY — More than 200 representatives from property companies learned about new housing policies during a meeting held yesterday in HCM City with the Viet Nam Real Estate Association and the Ministry of Construction.

The ministry explained that Decree 90, which took effect four years ago, was replaced with Decree 71.

The new decree contains detailed regulations covering different sectors in the local property market, and guides the implementation of the Law on Housing, according to Nguyen Trong Ninh, deputy director of the Housing and Real Estate Market Management Department.

In addition, Circular No 16 issued by the Ministry of Construction provides detailed guidelines for the implementation of Decree 71 regarding residential real estate transactions. The circular came into effect October 16.

Decree 71 contains regulations on the selection of developers, the appraisal and approval process of housing, commercial housing, individual housing, social housing projects and housing projects for public employees.

It also describes ways that project developers can raise capital for their projects.

Unlike the previous decree that contained vague language, the new decree allows developers to raise capital from banks, credit institutions, investment funds, corporate bonds, secondary investors and other organisations or individuals.

Under Decree 71, housing developers will be permitted to sell in advance a maximum of 20 per cent of the total number of apartments in a property project before finishing the foundation of the building.

The remaining sales must be traded via property exchange floors when the projects' foundations are completed.

The decree also outlines regulations and preferential policies for investors who develop social housing projects.

The aim is to encourage them to develop more housing projects and meet the housing demand of low-income earners.

In addition, Decree 71 has detailed guidance concerning housing transactions of Vietnamese residing abroad and of foreigners leasing houses in Viet Nam.

Regulations in previous decrees on housing policies that conflict with the new decree are no longer valid, according to Ninh.

Housing proposals submitted before August 8, the effective date of Decree 71, to provincial governments will be considered in several ways, he explained.

If the project has fewer than 2,500 apartments and is being built with State funds, the provincial People's Committee will make a decision based on Decree 90.

If it is being built with non-State funds, the local authority can issue an investment approval document to developers without asking them to submit a statement again.

If the project proposal has more than 2,500 apartments but does not mention investment sources, the provincial authority must send a statement to the Government for approval before it is turned over to the provincial government for final approval. — VNS

Wednesday, February 16, 2011

FDI disbursement accelerates in HCM City

The Ho Chi Minh City Planning and Investment Department reported the
city’s nine-month FDI disbursement hit 900 million USD, almost matching
the amount for the whole of 2009, but still only a small amount
compared with total FDI flow.

The yearly target of
1.43 billion USD is clearly within reach, however total FDI disbursed is
only 11.9 billion USD out of the total registered FDI of 28.4 billion
USD.

Projects operating in the HCMC City Export
Processing and Industrial Zone Authority (HEPZA) recorded the highest
FDI disbursement speed. HEPZA’s 479 valid projects have disbursed 82
percent of the total 2.8 billion USD registered, according to Nguyen Tan
Phuoc, Vice Head of the HEPZA authority.

In the new
Thu Thiem Urban Zone, three out of four licensed projects have been
kick-started, including a 120 million USD project to build 2,220
apartments in Binh Khanh ward, District 2.

The
Planning and Investment Department’s Deputy Director Lu Thanh Phong said
that slow disbursement is usually seen in large-scale real estate
projects that face obstacles in ground clearance and administrative
procedures.

The department and relevant authorities
have been adjusting and removing unnecessary procedures in order to
facilitate investment projects.

The city has also been
assessing large-scale real estate projects to find out reasons for
delay and is determined to withdraw licences from projects that cannot
provide sound reasons for long delays.

Recently, the Ministry of Planning and Investment decided to stop 34 projects in HCMC due to their slow progress./.

Saturday, February 12, 2011

Viet Kieu begin to invest in VN property market

HA NOI — A large number of Viet Kieu (overseas Vietnamese) have started to invest in the Vietnamese real estate market.

Investments had become more diversified and stronger than ever, said Megagroup's Director Nguyen Xuan Chau.

Chau added that the trend had started around 10 years ago and really picked up over the past two years.

In 2010, he said, a series of resorts and ecological tourism projects were announced with a growing number of North American management and consultancy firms co-ordinating the projects.

To capitalise on this, Minh Viet Investment Joint Stock Company recently bought into the franchise of a famous foreign company in order to use its trademark to invest in Viet Nam's real estate market.

According to the com-pany's director Chi Edward, his company will use the trademark to do business in training and brokerage as well as managing and developing the real estate market in Viet Nam.

The company had previously invested in projects in Ha Noi, HCM City and the northern province of Quang Ninh.

As further proof, at the end of 2009, the director of Binh Thien An Joint Stock Company, Viet kieu Trinh Thanh Huy, decided to return from Russia and announced that his company was looking to pour hundreds of millions of dollars into the real estate market in HCM City.

Binh Thien An is currently involved with the Thao Dien Metropolice project in District 2 of HCM City.

In the second and third quarters of this year, many other tourism developments were announced by overseas Vietnamese investors from eastern Europe.

The Vietnamese real estate market was still young. It had a huge potential to attract investment from overseas Vietnamese, Chau said.

Referring to a recent survey, experts said the new trend would create competitiveness in the market which would help develop it further.

The survey was carried out at an international real estate exhibition with the participation of 46 countries.

The results showed that investment interest in the Vietnamese real estate market had grown by 20-30 per cent since 2008.

Another survey conducted by a British company also found that in the next two years, Viet Nam would become one of the top three markets of interest in the world. — VNS

Friday, February 11, 2011

Vietnam real estate market offers more affordable options

Vietnam real estate market offers more affordable options The local residential market is undergoing a positive development: affordable housing is on the rise, according to the consulting firm CB Richard Ellis.

In a report released on Tuesday, the firm found that a wave of low-cost housing projects broke ground in Hanoi during the third quarter revealing a movement toward more affordable residential options.

The report authors also said that a new regulation (which caps the proportion of units sold via capital contribution contracts at 20 percent) is expected to help the market by enhancing transparency, placing pressure on developers with low financial capabilities, reducing the threat of price bubbles, and limiting speculative forces.

In the third quarter, the market was quieter with fewer new projects launched. Only 1,950 units were added to the market compared to last quarter’s 4,600 units, the report indicated.

The capital city expects to see the launch of 3,000 units in the fourth quarter, bringing total new supply in 2010 to nearly 16,000 units, it said. Following the opening and improvement of major infrastructure routes, western and southern districts are attracting new residents with easier access to core urban districts.

‘Pent-up demand’

Meanwhile, the fastest-growing segment of the real estate market in Ho Chi Minh City is also affordable homes.

“Twelve affordable projects were launched in the third quarter with asking prices ranging between US$563 and $923 per square meter,” CBRE said in a separate report, released on Wednesday.

“Despite the up-tick in inflation seen in the third quarter, the base of Vietnam’s economy is strong,” said Marc Townsend, managing director of CBRE Vietnam.

Commenting on the trend toward the affordable segment of the market, Rudolf Hever, associate director of Research and Consulting, said it’s clear that “as the Vietnamese economy continues to grow, and incomes increase, there is pent-up demand from people who were previously priced out of the market.”

He said the government has made a lot of effort to support the residential property market, including measures to increase transparency and increase the availability of loans.

“All these efforts work together, encouraging prospective home buyers to look at new and existing developments as a realistic option,” said Hever. “As these affordable projects achieve critical mass, the availability of facilities and amenities in these areas will increase too.”

Vietnam real estate market offers more affordable options

In the third quarter, the market was quieter with fewer new projects launched. Only 1,950 units were added to the market compared to last quarter’s 4,600 units, the report indicated.

‘Pent-up demand’

Meanwhile, the fastest-growing segment of the real estate market in Ho Chi Minh City is also affordable homes.

“Twelve affordable projects were launched in the third quarter with asking prices ranging between US$563 and $923 per square meter,” CBRE said in a separate report, released on Wednesday.

“Despite the up-tick in inflation seen in the third quarter, the base of Vietnam’s economy is strong,” said Marc Townsend, managing director of CBRE Vietnam.

He said the government has made a lot of effort to support the residential property market, including measures to increase transparency and increase the availability of loans.

Monday, January 24, 2011

Herd mentality adds to volatility of fluctuating real estate market

Construction of an apartment building in Ha Noi's Ha Dong District. Many incomplete apartments are bought by people who hope to re-sell their purchases at a profit. — VNA/ VNS Photo Tuan Anh

HA NOI — Vietnamese citizen Nguyen Hoai Nam bought a plot of land in Ba Vi District's Tan Linh Commune after hearing that the national administrative centre in Ba Dinh District would be moved to Ba Vi.

"I followed my friends and bought the property in the hopes that its price would increase much higher than what I had bought at VND800 million," Nam recalls.

Nam is not alone in his thinking.

It is not uncommon to see a number of investors pouring their money into buying land, following the advice of their relatives and friends.

Vice chairman of the Viet Nam Report Company Phung Hoang Co put forth a survey that found that nearly 62 per cent of the 500 questioned consumers in Ha Noi had bought real estate simply to resell it at a higher price.

"In many cases, herd mentality is a decisive factor to the fluctuating real estate market," said vice general secretary of the Association of Cities of Viet Nam Vu Thi Vinh.

She attributed the trend to insufficient information and a lack of understanding leading to many buyers who are then unable to analyse real changes in the market. Instead, they rely on the advice of acquaintances to buy land.

The Viet Nam Report survey also found that 44 per cent of buyers had invested their own money in buying property; 35 per cent borrowed from their friends and relatives and about 20 per cent used bank loans to buy property.

The desire to buy land has been boisterous in Ha Noi in the past months with projects spanning across the new urban areas of the capital's western region.

Analysts have attributed the trend to the expansion of the Lang-Hoa Lac Highway (now Thang Long Boulevard) and to an exhibition that focused on the capital's vision for development over the coming decades. The exhibition revealed that five satellite cities and the proposed Thang Long axis would link the Ba Vi region to the west of Ha Noi.

Former Vice Minister of Natural Resources and Environment Dang Hung Vo said the recent land fever in Ba Vi in particular and in the western region in general exposed the reality that both managers and investors were not professional.

"How can a project like Ba Vi, which is still waiting for planning approval, create an outbreak of land fever where several hundreds of investors rushed to buy land there?" said Vo.

He said land fever in Ba Vi did not follow market rules. Traders did not study information carefully but simply rushed into decisions because of the herd mentality.

Le Minh Hoang of the Ha Noi Real Estate Joint-Stock Company said most of the land fever actually deflated quickly because investors were short of information. And unfortunately, one negative consequence was wildly fluctuating real estate prices, he said.

Hoang added that the real estate market will be impossible to stablise if investors remain vague about information.

The problem, however, will hopefully be settled after the recent issuance of Government Decree 71, which imposes stricter rules on real estate investment.

Vo said the decree will help solve various issues, including the ways in which project developers raise capital from buyers and the regulations for the transfer of land-use rights, among others.

The decree is also expected to raise the market's transparency.

Vo said he hoped the decree would reject unprofessionalism and speculative investors who often spread misleading information to seek a profit. — VNS

Saturday, January 15, 2011

Hanoi commercial property booms

The Hanoi real estate market saw optimistic development in the third quarter and the growth trend is expected to continue to the end of this year, Savills Vietnam real estate agent reported Tuesday.

"Good economic recovery in the third quarter helped the office and retail sectors in the property market," said Pham Thanh Son, Savills Vietnam economics expert.

Hanoi 's office occupancy rate average increased to 91 percent, a 4 percent jump, in the second quarter, according to Savills associate director and head of research and consultancy Tran Nhu Trung.

The average occupancy rate in the city's shopping centres remained high at 94 percent and many new shopping centres opened in this quarter.

The serviced apartment sector average dipped slightly to 91 percent from 92 percent in the third quarter but average rental rates increased by 0.4 percent to US$26 per sq.m per month, Trung said.

Son reported challenges to credit acquisition for the capital property market, which include depreciating dong, high interest rates for loans and Decree 71, which contributed to a decline in mobilised capital.

Son also asserted that the increased price of gold and the higher exchange rate attracted more investors to the financial market so available capital for property projects has declined.

Thursday, January 13, 2011

Hanoi commercial property booms

The Hanoi real estate market saw optimistic development in the third
quarter and the growth trend is expected to continue to the end of this
year, Savills Vietnam real estate agent reported on Oct. 5.

"Good economic recovery in the third quarter helped the office and
retail sectors in the property market," said Pham Thanh Son, Savills
Vietnam economics expert.

Hanoi 's office occupancy
rate average increased to 91 percent, a 4 percent jump, in the second
quarter, according to Savills associate director and head of research
and consultancy Tran Nhu Trung.

The average occupancy rate
in the city's shopping centres remained high at 94 percent and many new
shopping centres opened in this quarter.

The serviced
apartment sector average dipped slightly to 91 percent from 92 percent
in the third quarter but average rental rates increased by 0.4 percent
to 26 USD per sq.m per month, Trung said.

Son reported
challenges to credit acquisition for the capital property market, which
include depreciating dong, high interest rates for loans and Decree 71,
which contributed to a decline in mobilised capital.

Son
also asserted that the increased price of gold and the higher exchange
rate attracted more investors to the financial market so available
capital for property projects has declined./.

Strict lending policies hamper contractors

Housing developers are struggling to cope with banks' tightened lending policies.

The new regulations in tandem with construction materials' rising
prices is making it difficult for developers to survive as the real
estate market continues to chill for the second straight quarter.

A leader of the Vietnam Construction and Export-Import Corporation
(Vinaconex) said an increase in construction materials' prices, along
with banks' restricted lending policies, had made construction companies
broke, forcing them to liquidate.

Construction materials'
prices increased by 30 to 40 percent during the past few months while a
new chill in the property market caused bidders to abandon their
projects after their proposals concerning the adjustment of construction
materials' prices were refused by house owners.

The
procedures for State funded construction projects, concerning price
adjustments, takes a long time, making the supply of housing projects
lag behind schedule which in turn adversely impacts the real estate
market.

The prices of construction materials including steel, cement and housing equipment continue to soar.

Construction materials account for 40 to 70 percent of the total
estimated capital for building projects, according to the Institute
of Construction Economics .

Property markets primarily
depend on monetary and credit policies, according to a Ministry of
Construction report that was submitted to the Government Office.

Banks began increasing lending interest rates and applying greater
restrictions on mortgage loans starting in July, following a warning
from the State Bank of Vietnam (SBV) that urged financial institutions
to be prudent with issuing loans for real estate projects.

The warning was issued in response to findings that real estate loans
accounted for more than 5 percent of the bad debts that had incurred at
several commercial banks in the country.

The SBV reduced
the short-term deposit proportion reserved for long-term loans from 40
percent to 30 percent and specified real estate loans as high risk.

Vinaconex deputy director Nguyen Dinh Thiet said commercial banks only
lent loans for up to 10 years, and total outstanding real estate loans
were restrained to 10 percent.

Commercial loans provide
the primary impetus for the property market, reports the Collier
International Company. Buyers are hesitating to borrow money from banks
to purchase homes, while banks increased their interest rates that range
from 17.5 to 18 percent per year.

Investors have begun to
secure capital from other sources including mobilising cash from
secondary investors and issuing bonds. Secondary investors are not so
interested in investing in housing projects, as the chill in the real
estate market continues./.

Wednesday, January 12, 2011

Ha Noi commercial property booms

HA NOI — The Ha Noi real estate market saw optimistic development in the third quarter and the growth trend is expected to continue to the end of this year, Savills Viet Nam real estate agent reported yesterday.

"Good economic recovery in the third quarter helped the office and retail sectors in the property market," said Pham Thanh Son, Savills Viet Nam economics expert.

Ha Noi's office occupancy rate average increased to 91 per cent, a 4 per cent jump, in the second quarter, according to Savills associate director and head of research and consultancy Tran Nhu Trung.

The average occupancy rate in the city's shopping centres remained high at 94 per cent and many new shopping centres opened in this quarter.

The serviced apartment sector average dipped slightly to 91 per cent from 92 per cent in the third quarter but average rental rates increased by 0.4 per cent to US$26 per sq.m per month, Trung said.

Son also asserted that the increased price of gold and the higher exchange rate attracted more investors to the financial market so available capital for property projects has declined. — VNS

Strict lending policies hamper contractors

Housing developers are struggling to cope with banks' tightened lending policies.

The new regulations in tandem with construction materials' rising prices is making it difficult for developers to survive as the real estate market continues to chill for the second straight quarter.

A leader of the Viet Nam Construction and Export-Import Corporation (Vinaconex) said an increase in construction materials' prices, along with banks' restricted lending policies, had made construction companies broke, forcing them to liquidate.

Construction materials' prices increased by 30 to 40 per cent during the past few months while a new chill in the property market caused bidders to abandon their projects after their proposals concerning the adjustment of construction materials' prices were refused by houseowners.

The procedures for State funded construction projects, concerning price adjustments, takes a long time, making the supply of housing projects lag behind schedule which in turn adversely impacts the real estate market.

The prices of construction materials including steel, cement and housing equipment continue to soar.

Construction materials account for 40 to 70 per cent of the total estimated capital for building projects, according to the Institute of Construction Economics.

Property markets primarily depend on monetary and credit policies, according to a Ministry of Construction report that was submitted to the Government Office.

Banks began increasing lending interest rates and applying greater restrictions on mortgage loans starting in July, following a warning from the State Bank of Viet Nam (SBV) that urged financial institutions to be prudent with issuing loans for real estate projects.

The warning was issued in response to findings that real estate loans accounted for more than 5 per cent of the bad debts that had incurred at several commercial banks in the country.

The SBV reduced the short-term deposit proportion reserved for long-term loans from 40 per cent to 30 per cent and specified real estate loans as high risk.

Vinaconex deputy director Nguyen Dinh Thiet said commercial banks only lent loans for up to 10 years, and total outstanding real estate loans were restrained to 10 per cent.

Commercial loans provide the primary impetus for the property market, reports the Collier International Company. Buyers are hesitating to borrow money from banks to purchase homes, while banks increased their interest rates that range from 17.5 to 18 per cent per year.

Investors have begun to secure capital from other sources including mobilising cash from secondary investors and issuing bonds. Secondary investors are not so interested in investing in housing projects, as the chill in the real estate market continues.

Tuesday, January 4, 2011

Vietnam’s real estate market stagnates

A deluge of development has left Vietnam swimming in apartments no one can afford

Workers at a construction site in downtown Ho Chi Minh City. Supply will increase on the local real estate and experts say this can put more pressure on prices.

The real estate market, especially the high-end aparment segment, has hit a rough spot recently as prices remain high in the face of abundant supply.

The actual demand for luxury property is very low, at the moment. Many developers have had to cut their prices and begin offering lots of perks to attract buyers. Despite these efforts, sales have sagged, according to Nguyen Manh Ha, director of the Construction Ministry’s Housing and Real Estate Market Management Department.

“This month only two people bought apartments,” said Nguyen Thu Ha, a salesperson from a real estate exchange center in Khuat Duy Tien Street in Hanoi. “Most people come here to check prices only.”

Many real estate exchange centers in the area are seeing the same situation, she said. Despite the slow trade, property prices remain beyond the financial grasp of many customers she explained.

In Ho Chi Minh City, only 14 percent of the luxury apartment supply was sold in the first eight months of this year. Meanwhile agents sold off 17 percent of midrange and 20 percent of low-end apartments, according to a recent survey conducted by the market research firm Cushman & Wakefield Vietnam.

The primary apartment market in Hanoi was generally not very vibrant in the second quarter. Only 670 units were sold, accounting for 48 percent of the primary supply, said Savills Vietnam, a UK-based research firm.

Hugo Slade, deputy director of Cushman & Wakefield Vietnam, attributed the stagnation to high real estate prices and high interest rates. Complicated borrowing procedures remain a major obstacle for those who cannot afford the inflated prices.

The price of luxury apartments stands at US$2,350-2,870 per square meter, while mid-range and low-end flats sell for $1,460- 1,860; and $780-810, respectively, according to the survey.

Nguyen Van Minh, general secretary of the Vietnam Property Association said the real estate market in Hanoi and some neighboring areas was very hot, when the National Assembly discussed the Hanoi zoning plan some months ago. Because the plan has still not been approved, the market has reverted to its previous state.

A supply surplus has only exacerbated the situation. According to the Ministry of Construction, 2,500 apartment projects are currently underway nationwide, including 800 in Hanoi, and 1,400 in Ho Chi Minh City.

A recent report from Savills Vietnam said there were 11,200 apartments available for sale in the southern city’s primary market in the second quarter, an increase of 24 percent compared to the first quarter. The company said about 28,500 apartments that are currently in the works will be completed between 2010 to 2012. An estimated 5,800 apartments will become available in the second half of 2010.

Minh from the property association, said the government has facilitated the construction of low-income apartments, and many projects have been implemented. Thus, many apartments will become available for sale by the end of this year.

The real estate consulting firm CB Richard Ellis, sales of mid-range and affordable development will continue to flourish in the coming months.

According to the Ho Chi Minh City Real Estate Association, mid-range housing will be the key real estate product both this year and the next. Housing products priced between VND12- 15 million per square meter will grow the most because both homebuyers and investors can afford them.

Saturday, January 1, 2011

Property investors dominate rich-list

Property investors dominate rich-list Most of the ten richest people on the Vietnamese stock market are real estate moguls.

Doan Nguyen Duc, chairman of Hoang Anh Gia Lai, reclaimed his top position on the list after falling to number two last year. As of Monday, his stockholdings were valued at more than VND10.5 trillion (US$541 million), according to data compiled by Thanh Nien.

Duc was followed by Pham Nhat Vuong, board member of both Vinpearl JSC and Vincom JSC, and Dang Thanh Tam, chairman of Kinh Bac Urban Development.

Three new investors who made their debut in this year’s top ten are also leaders of large real estate firms: chairman of Ocean Group Ha Van Tham, chairman of Phat Dat Real Estate Development Nguyen Van Dat, and chairwoman of Quoc Cuong Gia Lai JSC Nguyen Thi Nhu Loan.

Dat told Thanh Nien that he was happy to make the top ten. This meant his efforts so far have paid off and he is now recognized by shareholders and investors, he said. The goal for his company was to continue to expand its business and generate more profit, Dat added.

Analysts said the domination of property stock investors in the top ten meant that the sector still remains attractive. Meanwhile, some bank and technology stockholders lost their places in the list due to stock transfers and sharp declines in these stocks.

Together, the ten richest investors by stockholdings owned more than VND45 trillion ($2.3 billion) worth of stock, up 10 percent from last year. This is equivalent to 6.5 percent of the total capitalization of Vietnam’s stock market.

Two people in the top ten, Duc and chairman of Hoa Phat Group Tran Dinh Long (ranked fourth on the list), are the first private aircraft owners in Vietnam.

Economist Le Dang Doanh said it was normal to rank people based on their wealth in other countries, but it is a new trend in Vietnam, and hence some people were still uneasy about the practice.

“But I think it’s necessary to promote transparency,” he said. “Rich people should be acknowledged by society.”

Doanh said information disclosure will also improve the reputation of a company and give investors more confidence.

Vietnam has around 600 listed companies on two stock exchanges in Ho Chi Minh City and Hanoi. The exchanges’ total capitalization is equal to 40 percent of the country’s gross domestic product.

Economic growth accelerated in the third quarter, expanding 7.16 percent compared to 6.4 percent in the second quarter, according to figures released on Tuesday by the General Statistics Office.