Not so easy for home developers

HA NOI — Developers of luxury apartment projects have had to shift their sales strategies in face of flagging demand, said real estate consulting and services firm Savills Viet Nam.

Prior to the financial crisis, developers could sell units without much effort due to soaring demand, but they now had to turn to sales promotion programmes to turn over unit and meet sales targets, Savills said.

Indochina Land Ltd Co, developer of the Indochina Plaza Ha Noi project, recently announced a trade promotion programme for customers who buy apartments in the Xuan Thuy Road complex. The Mullberry project in Ha Dong District also has a programme in co-operation with a bank offering financing to buyers of apartment units, while the Richland Southern project has set up a preferential payment policy for customers.

Indochina Land sales manager Michael Piro also said his company often provided information to customers about the construction progress of projects, information they often expected to know before putting down a deposit.

Vu Xuan Thien, deputy head of the Ministry of Construction's real estate marketing department, said prices of the luxury apartment market were mostly stable, with prices rising for a few projects in prime locations. Luxury apartments in Ha Noi were currently selling at US$2-3,000/sq.m.

Savills predicted that real demand in the luxury apartment segment would continue to be high in the medium- to long-term due to improved living standards, rising per-capita incomes, and steady rates of population growth and urbanisation. — VNS

Related Articles

• Not so easy for home developers
• Overseas Vietnamese always welcomed in homeland: official
• Salmonella from eggs, not new to Vietnam: doctors
• Deputy Defence Minister restates military position
• Draining delays

Spiraling cost of import pulp pushes up paper price

HCMC – The price of paper products on the local market is expected to rise by 10%, because of the increasing price of imported pulp.

Cao Tien Vi, member of the Vietnam Pulp and Paper Association (VPPA), told the Daily that as the industry was still importing almost all the pulp needed for paper production, the increasing price of the imported pulp would mean a 10% rise in paper costs by the year-end.

He said the imported pulp was still very high at some US$700 per ton, nearly 50% more than the average price in recent years.

“The supplies for pulp materials in the world markets are down because of some recent forest fires, so I think the price of imported pulp will keep increasing,” Vi said.

At the moment, Vietnam’s paper industry is importing pulp from Brazil, Russia, Canada and Indonesia.

Vi said the consumption of domestically produced paper had declined with more competition with imported products.

“This has been causing difficulties for local paper producers,” he said.

At the moment, the country is trying to reduce paper imports and increase exports of its own products but without much success because of quality and price problems.

Vietnam produces 1.5 million tons each year, compared to demand of over two million tons.

The imports of paper products into Vietnam could fall because of the 2% devaluation of the dong against the U.S. dollar, Vi said.

The country depends totally on imports for some special papers such as packing paper, decorative paper and cardboard for boxes.

According to VPPA, 35% of local paper enterprises are still small producers with outdated technology that wastes energy and water and causes pollution.

The industry would have difficulty updating technology without more support from government, Vi added.

Related Articles

• Assoc insists on power price hike despite protests
• Dairy firms to register prices in October
• Car imports decline for first time
• High rice price cuts exports
• Energy group asks for 50% price hike

Business boom sparks office market growth

The growing number of enterprises in Da Nang has "strongly affected" the city's office market, creating a strong demand for  more supply, according to UK real estate service provider Savills.

The number of enterprises in the city has been on the increase for over five years, with about 2,100 new companies receiving business licenses in 2009, Savills said in a quarterly report released last week.

Many overseas Vietnamese have opened businesses in Da Nang, which has led to more trading in the local office market, said the report.

Currently, there are 21 office buildings with a total area of around 66,344 square meters. “Savills anticipates that approximately 94,000 square meters of office space for lease from about 14 projects will enter the Da Nang market over the next five to seven years,” said the report.

As for the retail market, the company observed that the total retail area of approximately 72,000 square meters remained unchanged in the second quarter with no new retail centers. Occupancy rate reached 96 percent, also remaining stable quarter-on-quarter.

Savills said as the GDP per capita is on the rise in Da Nang, the city has great potential to develop its retail distribution network. “From now until 2012, the Da Nang retail sector is expected to accommodate about five projects, with a total area of about 48,000 square meters of retail space,” the company said.

The UK company also said more villa and apartment projects will enter the market over the next few years. In the second quarter this year, four projects were launched, including Vinpearl Da Nang with 39 seaside villas.

Wealthy Vietnamese are the major target purchasers for both villas and apartments in Da Nang, it said.

Related Articles

• Business boom sparks office market growth
• Economic growth remains positive, say experts
• Securities markets stop losing streak
• ‘Hold us to higher standards’
• Market moves up sharply

Invest in Asia amid ‘double-dip’ recession risk, Pangestu says

Asian economic growth ensures the region will stay attractive to investors amid the risk of a double-dip global recession, Indonesian Trade Minister Mari Pangestu said at a meeting in the Vietnamese city of Da Nang.

Earlier this week, Nobel Prize-winning economist Joseph Stiglitz said the European economy is at risk of sliding back into a recession. On Tuesday, European Union Economic and Monetary Affairs Commissioner Olli Rehn said in New York that Europe and the US are in the “same boat” when facing the risk of another recession.

While acknowledging risks to the global economy from a double-dip recession, Pangestu said increased trade among members of the Association of Southeast Asian Nations has made the region more attractive to investors. “Asia is really where the growth is happening,” she said at the meeting of ministers from the group.

The 10 countries in the group known as Asean expect overall GDP growth among member states to exceed 5 percent this year, up from 1.5 percent in 2009, according to a statement posted today on the group’s website. Vietnamese Prime Minister Nguyen Tan Dung told the conference that regional countries are posting a “solid economic recovery.”

Asean attracted 3.6 percent of global foreign direct investment in 2009, up from 2.8 percent in 2008, according to the organization.

Vietnam’s gross domestic product may grow by as much as 7 percent this year, Dung said in June.

Related Articles

• Invest in Asia amid ‘double-dip’ recession risk, Pangestu says
• Social security must be guaranteed: PM
• IFC: Vietnam needs to increase PPP to support economy
• Vietnam Jan-Aug FDI down 12.3 pct
• Energy group asks for 50% price hike

Invest in Asia amid ‘double-dip’ recession risk, Pangestu says

Asian economic growth ensures the region will stay attractive to investors amid the risk of a double-dip global recession, Indonesian Trade Minister Mari Pangestu said at a meeting in the Vietnamese city of Da Nang.

Earlier this week, Nobel Prize-winning economist Joseph Stiglitz said the European economy is at risk of sliding back into a recession. On Tuesday, European Union Economic and Monetary Affairs Commissioner Olli Rehn said in New York that Europe and the US are in the “same boat” when facing the risk of another recession.

While acknowledging risks to the global economy from a double-dip recession, Pangestu said increased trade among members of the Association of Southeast Asian Nations has made the region more attractive to investors. “Asia is really where the growth is happening,” she said at the meeting of ministers from the group.

The 10 countries in the group known as Asean expect overall GDP growth among member states to exceed 5 percent this year, up from 1.5 percent in 2009, according to a statement posted today on the group’s website. Vietnamese Prime Minister Nguyen Tan Dung told the conference that regional countries are posting a “solid economic recovery.”

Asean attracted 3.6 percent of global foreign direct investment in 2009, up from 2.8 percent in 2008, according to the organization.

Vietnam’s gross domestic product may grow by as much as 7 percent this year, Dung said in June.

Related Articles

• Invest in Asia amid ‘double-dip’ recession risk, Pangestu says
• Social security must be guaranteed: PM
• IFC: Vietnam needs to increase PPP to support economy
• Vietnam Jan-Aug FDI down 12.3 pct
• Energy group asks for 50% price hike

Vietnam Aug trade deficit hits $900 mln: gov’t

Vietnam, which devalued its currency last week, estimates its trade deficit would stay below US$1 billion for a fourth consecutive month.

The government on Tuesday estimated the trade deficit in August was $900 million, and revised July's figure to $978 million from $1.15 billion.

The monthly announcement of imports and exports comes less than a week after the central bank devalued the currency in a move it said was aimed at helping control the trade deficit, which has put pressure on the dong for months.

Exports surged 27.7 percent in August compared to the same month last year to $6.0 billion, while imports rose 11.3 percent to $6.9 billion, the statistics office said.

The year-to-date trade deficit, which stood at $8.16 billion, according to the statistics office, was "more than covered" by structural flows, said Prakriti Sofat, an economist following Vietnam at Barclays Capital in Singapore.

"Overall, we continue to expect the balance of payments to post a surplus, allowing the country to build FX reserves," she said.

Last Wednesday, the central bank devalued the dong's midpoint by 2 percent against the dollar in a move it said it took to help control the trade deficit. The trading band of 3 percent on either side of that rate was maintained.

After the devaluation, the dong quickly slipped to the weak end of its trading band against the dollar.

In a research note after the devaluation, ANZ noted that the outlook for exports "remains challenging with global growth set to moderate" in the second half of the year.

Related Articles

• Vietnam Aug trade deficit hits $900 mln: gov’t
• Cashew traders yet to embrace trading center system
• PM foresees bright future for co-operation with Africa
• Weaker dong enhances inflation threat: experts
• Vietnam Air accepts web check-in for int’l flights

Vietnamese central bank to keep interest rate at 8 pct

Vietnam’s central bank said it will keep its benchmark interest rate unchanged for a ninth consecutive month in September as it strives to boost lending.

The so-called base rate will stay at 8 percent from Sept. 1, the State Bank of Vietnam said in a statement on its website Wednesday. The benchmark was raised from 7 percent on Dec. 1. The refinancing and discount rates will also be held at 8 percent and 6 percent respectively.

The government has been urging banks to cut credit costs to bolster the economy as it targets 25 percent lending growth and 6.5 percent economic expansion this year, even as inflation has held above 8 percent for most of 2010. The central bank allowed lenders to set their own rates for medium- to long-term loans in February, scrapping a cap linked to the benchmark.

“The base rate will stay at 8 percent until the end of the year,” Alan Pham, Ho Chi Minh City-based chief economist at VinaSecurities Joint-Stock Co., said before the announcement. Following the elimination of the cap, the base rate “is irrelevant and nobody cares what it is,” Pham said.

Commercial lending rates ranged from 12 percent to 15 percent in July, the central bank said in August. It previously said it will seek to further cut the costs over the rest of 2010 through measures including increased money supply. Credit growth reached 12.97 percent by July 31 from the end of last year.

Dong devaluation

The State Bank of Vietnam lowered the dong’s reference exchange rate by 2 percent last week, citing the need to narrow the trade deficit. The shortfall was $900 million this month from a revised $978 million in July, a report showed Tuesday. For the eight months through August, the gap was $8.16 billion.

The dong traded at 19,490 per dollar at 4:18 p.m., down from 19,099 before the devaluation was announced. The Ho Chi Minh City Stock Exchange’s VN Index slid 2.4 percent to 423.89, after entering a so-called bear market Tuesday following a drop of 21 percent since May 6.

“With the recent devaluation of 2 percent, inflation would likely pick up,” Pham said. “So banks have to keep up their lending rates or even raise them, to keep their real rates positive.”

Inflation cooled for a fifth month in August, climbing 8.18 percent from a year earlier compared with 8.19 percent in July, according to data released this week.

Vietnam’s gross domestic product expanded 6.4 percent in the second quarter, after advancing 5.8 percent in the first three months of the year. Prime Minister Nguyen Tan Dung said in June the economy may grow as much as 7 percent in 2010.

The Southeast Asian nation is preparing a “rapid and sustainable” development strategy for 2011 to 2020 that will lead to average GDP growth of 7 percent to 8 percent a year for the period, the prime minister said last week.

Related Articles

• Vietnamese central bank to keep interest rate at 8 pct
• Banks scramble for mid-level managers
• Martial artists set for karate tourney
• PM lauds police for keeping public order
• Social security must be guaranteed: PM