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.

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TNK-BP said to bid for BP Vietnam project as soon as next week

TNK-BP will make an offer to buy BP Plc’s stake in an offshore natural-gas project in Vietnam and three assets in Venezuela as early as next week, said a person close to the Russian oil producer’s board.

TNK-BP, owned 50-50 by BP and a group of Russian billionaires, received board approval today to bid for the Nam Con Son gas block, pipeline and facilities in Vietnam and oil assets in Venezuela, the person said, declining to be identified before the offers are made.

The board didn’t approve proposals for assets in other countries, the person said. BP’s directors on the board recused themselves from the vote, the person said.

TNK-BP board directors BP’s former Chief Executive Officer Tony Hayward, former German Chancellor Gerhard Schroeder and former NATO Secretary-General George Robertson declined to comment.

BP, Europe’s largest oil producer by volume, plans to sell $30 billion of assets in 18 months to cover costs linked to the Gulf of Mexico oil spill, the worst in U.S. history. In Venezuela, BP has stakes in the Petroperija and Boqueron oil fields and the Petromonagas heavy oil-upgrading project, which produces 110,000 barrels of oil a day, according to BP’s website. Petroperija and Boqueron produce a combined 19,500 barrels a day, according to PDVSA’s website.

Mikhail Fridman, executive chairman and one of the Russian shareholders in TNK-BP, said in a Sept. 15 interview that the venture is ready to buy the assets, as well as those BP is selling in other countries.

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TNK-BP said to bid for BP Vietnam project as soon as next week

TNK-BP will make an offer to buy BP Plc’s stake in an offshore natural-gas project in Vietnam and three assets in Venezuela as early as next week, said a person close to the Russian oil producer’s board.

TNK-BP, owned 50-50 by BP and a group of Russian billionaires, received board approval today to bid for the Nam Con Son gas block, pipeline and facilities in Vietnam and oil assets in Venezuela, the person said, declining to be identified before the offers are made.

The board didn’t approve proposals for assets in other countries, the person said. BP’s directors on the board recused themselves from the vote, the person said.

TNK-BP board directors BP’s former Chief Executive Officer Tony Hayward, former German Chancellor Gerhard Schroeder and former NATO Secretary-General George Robertson declined to comment.

BP, Europe’s largest oil producer by volume, plans to sell $30 billion of assets in 18 months to cover costs linked to the Gulf of Mexico oil spill, the worst in U.S. history. In Venezuela, BP has stakes in the Petroperija and Boqueron oil fields and the Petromonagas heavy oil-upgrading project, which produces 110,000 barrels of oil a day, according to BP’s website. Petroperija and Boqueron produce a combined 19,500 barrels a day, according to PDVSA’s website.

Mikhail Fridman, executive chairman and one of the Russian shareholders in TNK-BP, said in a Sept. 15 interview that the venture is ready to buy the assets, as well as those BP is selling in other countries.

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Vietnam urges US to reduce trade barriers

Vietnam has called on the US to minimise its trade barriers and
play a more active role in the multilateral trade system.

A Vietnamese representative made the request at a session held at the
World Trade Organisations (WTO) headquarters in Geneva on Sept. 29 and
Oct. 1 to review the US ’s trade policies.

Head
of the Vietnamese Delegation to the UN, WTO and other international
organisations in Geneva Ambassador Vu Dung and officials from the
Ministries of Industry and Trade, and Foreign Affairs attended the
event.

The representative voiced concerns over the
US ’s trade barriers that resulted in anti-dumping duties against frozen
shrimp, plastic bags and tra fish (Pangasius) imported from Vietnam .

Vietnam expected that the US would
re-examine its investigations on the imposition of anti-subsidy and
anti-dumping tariffs before making decision to avoid affecting other WTO
members.

Two-way trade between Vietnam and the
US has grown steadily, reaching its peak of 15 billion USD in 2009, 15
times higher than the figure in 2001 when the two nations had not
signed the Bilateral Trade Agreement (BTA) yet.

The
US has become as Vietnam ’s biggest importer in recent years,
importing 11.5 billion USD worth of goods in 2009, accounting for
one-fifth of the Southeast Asian country’s total exports. In the first
five months of 2010, bilateral trade hit 7.75 billion USD, including
6.09 billion USD from Vietnamese exports.

The
country emerged as the biggest foreign investor in Vietnam last
year, with a combined registered capital of 9.8 billion USD.

The US is also an important partner of Vietnam in the current
negotiations on the Trans-Pacific Strategic Economic Partnership
Agreement./.

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Hanoi birthday bash fails to enthuse travel agents

It has been the most anticipated event of the year, but travel agents and domestic tourists do not seem to be caught up in the enthusiasm as Hanoi’s 1,000th anniversary celebration gets underway today.

There has been no increase in prices of tours, but travel agents are concerned about difficulties in transportation because of the ban on vehicles on several streets. They are also worried about the traffic jams likely to occur during the ten-day festivities.

Nguyen Cong Hoan, deputy director of travel agent Hanoi Redtour, said: “We are not providing tours to Hanoi for this event.”

It was difficult to work out plans for the tours because the event’s detailed program was declared too late, he said.

“The most difficult part for tours at this time is not booking air tickets or hotels, but vehicles to transport visitors,” he said.

The Hanoi Transport Department did not announce the list of streets where vehicles will be banned on the festive days until September 20, while most travel agents have to book hotels months earlier.

Many hotels are located on banned streets, so it would be impossible to get there by car. Also, agents could not cancel bookings they’d already made to seek other hotels with better access and facilities for their customers.

Other shortcomings in organizing the festival have also puzzled travel agents. Hoan said: “We don’t know which programs (of the event) visitors can attend, or where to buy tickets for them.” He was also concerned about taking care of his customers as a huge number of visitors will rush to Hanoi at this time.

Duong Mai Lan, head of the market research and development bureau of travel agent Vietravel, admitted that the number of visitors booking tours on the occasion of the festival is not big. Her firm is now still selling tours for local customers to Hanoi during the festival.

Due to the ban on vehicles in some routes, and difficulties in booking hotels, the firm has to change some programs in tours to Hanoi during this event, Lan said. “We may book hotels in Ha Long Town instead of Hanoi as previously planned.”

Nguyen Ngoc An, who is in charge of domestic tours for travel agent Fiditour, said they had not focused on attracting tourists for the occasion, partly due to difficulties in booking low-cost air tickets, and transportation of customers in vehicle-banned streets.

The firm has received more than 100 customers for Hanoi tours during the event, he said.

Some people in Ho Chi Minh City have said they are fed up of the traffic jams in their own city and do not want to experience the same again in Hanoi.

The director of a travel agency said it was not peak tourism season right now. There are a few families booking tours, because children have to go to school, he said.

Plenty of room

Hanoi expects to welcome 700,000 to 800,000 local and foreign visitors during the event, according to the Hanoi Department of Culture, Sports and Tourism.

However, even given this influx, there has been no shortage of hotel rooms for visitors and prices have not increased by much.

Lan of Vietravel said most hotel rooms had been reserved months ago, so there was no increase in the prices.

A representative of the Hoa Binh hotel said: “The possibility of hotel room shortage is very low. We have many rooms vacant right now.”

To serve visitors for the occasion, Hanoi has garnered an additional 4,000 hotel rooms. The city now has ten five-star hotels, several dozen four or three-star ones, and many mini hotels.

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Vietnam reaffirms inflation control plan

Vietnam will continue to tighten control over consumer prices through the end of the year as the country aims to keep inflation at 8 percent.

At a press conference held on Thursday, Minister Nguyen Xuan Phuc said it will be necessary to keep an eye on milk and medicine prices in particular.

Phuc said the government believes it can keep inflation under its target maximum, but that does not mean there is no need to maintain vigilance.

Prime Minister Nguyen Tan Dung has ordered drastic measures to be taken to keep prices stable and ensure enough supplies of consumer goods, Phuc said.

Consumer prices in Vietnam climbed 8.92 percent in September compared to a year earlier, according to figures released last week by the General Statistics Office in Hanoi.

Meanwhile, the Asian Development Bank on Tuesday forecast that Vietnam’s inflation this year will reach 8.5 percent.

Vinashin’s restructuring

Talking to the press on Thursday, Phuc said state-owned shipbuilder Vinashin has raised US$75 million by selling five ships. The group planned to sell another 35 ships for a total of around $160 million by year's end.

He said the 70,000 jobs at Vinashin have been secured. He also said new blood will be brought into the company, including a new chairman.

Vietnamese police have arrested five former Vinashin officials amid a financial investigation in to the company, which teetered on the verge of bankruptcy this summer. Pham Thanh Binh, the company’s former chairman and chief executive officer, was arrested in August.

Deputy Transport Minister Nguyen Hong Truong announced that the government has lent $3 million from its bond proceeds to Vinashin so that the company could repay the remaining debt owed to France’s Natixis Bank.

The loan did not come from the $1 billion 10-year bond issued in January as reported by local media, he said.

Truong also said many Japanese and Taiwanese investors have expressed interest in buying Vinashin’s factories, but so far no official purchase offers have been made.

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EVN Telecom speeds up privatization

EVN Telecom, a subsidiary of state-owned Electricity of Vietnam, plans to complete its share selloff this year as the company is facing financial difficulties, news website VnExpress reported Friday.

The phone company will sell up to 30 percent of its shares in an initial public offering and at least 20 percent to foreign strategic partners, the report said. Foreign candidates have to meet certain requirements including experience in operating 3G networks.

VnExpress said two foreign institutional investors and two local companies have offered to become EVN Telecom’s partners.

The report cited an unnamed source as saying that EVN Telecom has had to speed up the process of equitization (the term for privatization in Vietnam) because the company faces financial difficulties and increased competition from other mobile phone carriers.

Vo Quang Lam, deputy general director at EVN Telecom, said the plan to sell shares to foreign investors has been approved by the government.

As negotiations are ongoing, the names of the prospective investors cannot be announced now, Lam said.

Three local telecom companies have partnered with foreign firms – Hanoi Telecom, S-Fone and Gtel. However, the partnerships are unstable and likely to fail, VnExpress noted.

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