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

Related Articles

• Banks begin to cut back interest rates
• Green cars begin world race
• Market moves up sharply
• IFC: Vietnam needs to increase PPP to support economy
• Ford to sell most of stake in Japan's Mazda: reports

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.

Related Articles

• Vietnam’s real estate market stagnates
• Market moves up sharply
• Assoc insists on power price hike despite protests
• Chau Doc’s curried fish vermicelli: Bun nuoc ken
• Greenback firmer on signs of rising demand

Tightened credit chills real estate sales

Work underway on a low-cost housing project in the northern province of Vinh Phuc. Commercial banks are tightening their real estate lending policies, sending a new chill over the property market. — VNA/VNS Photo Tuan Anh

HA NOI — Commercial banks are tightening their real estate lending policies, sending a new chill over the property market.

Since July, banks have hiked lending interest rates and applied greater restrictions on mortgage loans, following a warning from the State Bank of Viet Nam urging greater caution on loans for real estate projects.

The warning was a response to the fact that real estate loans had risen to account for over 5 per cent of the bad debts of several commercial banks.

The real estate market contained high risks since many investors had leveraged existing projects as collateral to finance new projects, said Asia Commercial Bank credit council chairman Pham Trung Cang.

Speculators were also financing the acquisition of homes and apartments in order to obtain additional capital for investment, allowing one housing project or unit to be used as collateral for a loan up to three times, Cang said.

Driven by this speculative fever, the prices of homes and apartments have increased substantially, and unequally among cities and provinces. For instance, in the last quarter of the year, the cost of a plot of land in the western part of Ha Noi rose by 30 per cent between December and July, while prices in HCM City remained fairly constant.

The risk to banks has become significant. In recent years, loans to build, purchase or improve homes have accounted for 35-50 per cent of outstanding commercial bank loans made to individual borrowers.

As of July 31, total outstanding mortgage loans totalled VND210.7 trillion (US$10.8 billion), an increase of about 14.4 per cent from December 31 of last year, the ministry said. But loans for new housing projects, meanwhile, actually fell by 2.35 per cent during the period.

To cool down real estate lending, banks have recently hiked real estate interest rates from a low of 15 per cent to a high of 20 per cent, according to the Ministry of Construction.

But, in a report submitted to the Government Office last week, the ministry complained that tighter credit posed major obstacle to further real estate development and was adding to the instability of the real estate market.

In early 2009, the report said, the availability of low interest loans under the Government's economic stimulus package caused a short term spike in real estate prices in Ha Noi. But, since the end of the subsidised-interest loan programme, the real estate market has remained quiet, and in the third quarter of this year, threatened to become frozen due to tighter credit policies.

The report urged greater flexibility in regulating the real estate market.

About 2,500 housing projects are currently under construction, according the ministry figures, including 800 projects in Ha Noi, 1,400 in HCM City, 260 in Hai Phong, and 120 in Da Nang. — VNS

Related Articles

• Lack of credit hampers SMEs
• Assoc insists on power price hike despite protests
• Girls gear up for Vietnam’s Next Top Model
• Banks scramble for mid-level managers
• HCMC to relay grand sale program to November