Developers focus on lower-cost housing

Property developers remain optimistic and are focusing on the medium –
and low-cost housing segments though demand has yet to recover from a
prolonged slump.

Hugo Slade, deputy director of market research company Vietnam Cushman
& Wakefield, said so far this year, 46 development projects with
8,550 apartments costing an average of 15.5 million VND per square metre
came into the market.

Developers continued to launch
their products despite low demand caused by high interest rates and
tortuous loan procedures for buying houses, he added.

According to the director of a property company who wished to remain
unnamed, since the market has been dull for two years, most developers
have run out of money.

Among those are Happy Plaza in Binh
Chanh District which consists of 600 apartments priced at 12.5
million-13.5 million VND per square metre and with an average size of
60sq.m.

Thu Duc Housing Development Joint Stock Co is
confident that the medium-priced apartment segment will continue to do
well for at least the next 10 years and has begun the Truong Tho
apartment project at an average price of 15.5 million VND per square
metre.

It has sold all 120 units in the first phase and kicked off sale for the second phase on September 24.

Van Phat Hung Joint Stock Co plans to initially offer 110 apartments in
its La Casa tower in District 7. It is building a total of 2,000 units
there.

Foreign property developers have begun to show
interest in the medium-priced segment unlike earlier when they were
completely focused on the luxury segment.

An executive at
Singapore-owned CapitaLand Co said the company will start building
apartments costing less than 20 million VND per square metre.

He did not mention a time frame but said it was to diversify the firm's offerings in the Vietnamese market.

Small apartments priced at 400 million VND - 800 million VND are the
most in demand, property brokers said, adding 80 percent of successful
housing transactions are in the medium – and low-cost segment./.

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Developers focus on lower-cost housing

Apartment blocks in Tan Phu District, HCM City. Property developers remain optimistic about the medium- and low-cost housing segments. — VNA/VNS Photo Manh Linh

HCM CITY — Property developers remain optimistic and are focusing on the medium – and low-cost housing segments though demand has yet to recover from a prolonged slump.

Hugo Slade, deputy director of market research company Viet Nam Cushman & Wakefield, said so far this year, 46 development projects with 8,550 apartments costing an average of VND15.5 million per square metre came into the market.

Developers continued to launch their products despite low demand caused by high interest rates and tortuous loan procedures for buying houses, he added.

According to the director of a property company who wished to remain unnamed, since the market has been dull for two years, most developers have run out of money.

Among those are Happy Plaza in Binh Chanh District which consists of 600 apartments priced at VND12.5 million-13.5 million per square metre and with an average size of 60sq.m.

Thu Duc Housing Development Joint Stock Co is confident that the medium-priced apartment segment will continue to do well for at least the next 10 years and has begun the Truong Tho apartment project at an average price of VND15.5 million per square metre.

It has sold all 120 units in the first phase and kicked off sale for the second phase on September 24.

Van Phat Hung Joint Stock Co plans to initially offer 110 apartments in its La Casa tower in District 7. It is building a total of 2,000 units there.

Foreign property developers have begun to show interest in the medium-priced segment unlike earlier when they were completely focused on the luxury segment.

An executive at Singapore-owned CapitaLand Co said the company will start building apartments costing less than VND20 million per square metre.

He did not mention a time frame but said it was to diversify the firm's offerings in the Vietnamese market.

Small apartments priced at VND400 million-VND800 million are the most in demand, property brokers said, adding 80 per cent of successful housing transactions are in the medium – and low-cost segment. —VNS

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Binh Duong sees significant growth in property market

HCM CITY — Southern Binh Duong Province is experiencing a rapid economic growth along with a surge in activity in the residential property segment.

Between April and July, the province, which is near HCM City, saw four new residential projects enter the market for sale, with a total of 555 units including apartments, villas/ townhouses and land plots.

Currently, there are 20 projects with around 7,600 units in the primary market and 30 projects with around 10,600 units in the secondary market, comprising apartments for sale, villas/ townhouses and land plots, according to property-service firm Savills Viet Nam.

In addition, the 11-ha Eco Xuan, which broke ground in August by Malaysian company Setia Lai Thieu, will have a total of 1,500 apartments and houses, apart from other facilities over five years.

Di An District has the largest market share, with 46 per cent of the total primary market, and Ben Cat District, at 19 per cent, is ranked second.

In the primary market in July, the average price of apartments was US$654 per square metre.

The villa and townhouse sector achieved approximately $200,000 per unit and land lots about $359 per square metre.

The secondary price for the land-lot sector, however, has fallen approximately 16 per cent to $173 per square metre.

In the next few years, about 15 residential projects with about 5,800 units are expected to be launched.

Future supply continues to be concentrated in Di An and Thu Dau Mot districts, accounting for around 70 per cent of market share, due to the advantage of infrastructure and proximity to HCM City and the planned Binh Duong New City.

The supply of future apartment projects accounted for the highest market share, with 86 per cent of the total future supply.

Binh Duong Province's population has grown to 1.5 million, half of whom have migrated from other parts of the country. The figure has almost doubled from what it was in 2000.

The population growth rate is nearly double HCM City's population growth rate, which has been 3.5 per cent per year recently. — VNS

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Developers unhappy over new fees

An overview of a corner of Phu My Hung urban area. Enterprises investing in housing projects may have to pay twice – first when buying the land and second when paying use and clearance fees. — VNA/VNS Photo Kim Phuong

HA NOI — Real estate companies said planned land-use and compensation fees would eat into their profits and could even force them into liquidation.

Decree 69/CP, which becomes effective from the beginning of October, states that new land fees for real estate enterprises will be based on market prices. If the draft comes into effect unchanged, firms will be forced to pay the full market price, instead of 20 to 30 per cent as before.

Le Hoang Chau, president of the HCM City's Real Estate Association, said enterprises investing in housing projects would have to pay twice – first when buying the land from its owners and second when paying usage and clearance fees.

"This will cause land prices to soar as enterprises will have to increase the selling price of housing in order to offset their increased outlay," he said.

Lawyer Nguyen Thi Cam said the new regulation had several weakness that were detrimental to real estate firms.

She said the new decree should be modified because real estate companies would have to pay the same fees for land that had no infrastructure as that with infrastructure because market prices were based on developed land.

Nguyen Canh Ha, director of An Thien Ly Company, said his company acquired a housing project in Vinh City. He said his company had agreed to buy the land for VND4 million (US$ 210) per square metre, while selling it for VND4.5 million ($230) per square metre.

However, he said under the new regulation, his company would have to pay an additional fee of $230 per square metre for using the land. As a result, he said his firm had been forced to pull out.

Meanwhile, a representative from Binh Dan Company said his firm had invested in a 14,000-sq.m housing project in HCM City. According to the new regulation, his company would have to pay a land-use fee of around VND57 billion ($ 2.8 million), while the whole project itself was worth just VND60 billion ($3 million).

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, also said the new law would make it hard for companies to earn money.

He said that under the new regulation, for a 10,000-sq.m housing project, a business would have to sell out about VND51 billion ($2.6 million), which would include compensation to land owners of VND40 billion ($2.1 million), spending for public purposes such as parks of about VND8 billion ($430,000) and roads VND3 billion ($160,000). For the whole project, his company could expect to earn just VND600 million ($32,000), he said.

Le Ngoc Khoa, deputy director of the Department for Public Assets Management, said HCM City real estate firms would be hardest hit because companies typically paid very high compensation costs for agricultural land, which was however cheap in comparison to developed land. Under the new rules, they would have to pay far more to develop rural land.

Nguyen Quoc Chien, director of Pricing Division under the HCM City's Department of Finance, said relevant bodies would consider amending the new regulation if it was felt property developers were being unfairly treated. — VNS

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Highrise building ban casts pall over apartment market

HA NOI — Sales of older high-rise apartments remain sluggish in Ha Noi, with buyers shopping carefully to avoid possible losses in the face of an outstanding Government decision issued in 2007 to require all older apartment blocks in the capital city to be rebuilt.

Since then, the prices of older apartment units in four districts , including Hai Ba Trung, Dong Da, Ba Dinh and Cau Giay, have increased sharply, to an average of VND20-40 million (US$1,050-2,100) per square metre, according to Northern Green Land Real Estate and Services Company.

Older units on Nguyen Cong Tru Street, one of the city's hottest addresses, were averaging as high as VND60 million ($3,160) per square metre.

However, prices receded in the face of a Government decision last December to ban high-rise construction, a move which aimed to protect architectural values and social and technical infrastructure in a part of the city that is home to many historically and culturally significant buildings.

The ban temporarily halted 223 ongoing high-rise construction projects in the four central districts of Hoan Kiem, Hai Ba Trung, Ba Dinh and Dong Da.

While the ban was lifted in July this year, construction continues to be barred in the Ba Dinh political centre, Old Quarter and Ho Guom Lake, Old Citadel and Army areas.

And the lasting effect of the ban has been a chilling effect on the market for older units, with many real estate brokerages suffering the consquences.

BDS Real Estate Co director Le Xuan Truong was still advising clients and investors to be very careful when considering this market.

It would be difficult to see this market reviving since it was under a constant threat of new Government regulation, agreed Hoa Phat Land Co general director Pham Trung Ha. The city would continue to control closely older units while tightly regulating new construction, he said.

Once new construction commenced to replace more of the older buildings, more delays would occur as current owners and new builders negotiated compensation, Ha added.

"If the projects are located in licensed areas and the investors have pledged to implement the projects as scheduled, these projects could still be highly profitable market," said Ha. — VNS

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