Real Estate in Vietnam

Property firms see profits dwindling to zero

2012-02-22T13:01:00.000+07:00

Most property companies saw their profits last year declining almost to nil compared to the previous year as the gloomy market continued to adversely affect their operations.

A sharp revenue drop and a build-up of unsold products caused by weak demand in the apartment segment coupled with rising borrowing costs have led to the poor business results of realty firms.

The market leader Hoang Anh Gia Lai saw its profit plunge by 89% year-on-year, from 2.08 trillion dong in 2010 to 224 billion dong last year. The group explained its subsidiaries no longer enjoy profits generated by the parent firm as the latter is now only in charge of management.

Sai Gon Thuong Tin Real Estate Company, better known as Sacomreal, recorded a loss of nearly 40 billion dong in the final quarter of last year. The firm’s revenue from product sales and services in 2011 halved to 540 billion dong from 1.09 trillion dong in 2010.

Sacomreal’s profit was dragged down 83% to a mere 80 billion dong last year, against 485.5 billion dong in 2010.

Phat Dat Property Development Corporation was faring no better. The company in its financial statement reported its 2011 revenue totaled a mere 127 billion dong, a drop of 92% from 1.57 trillion dong in the year before. The company’s profit also dipped to 4.5 billion dong, equivalent to some 1% of the level of 331 billion dong in 2010.

With the loss of over 225 million dong recorded in the last quarter of 2011, the year’s profit of House Vietnam Joint Stock Company dwindled by 96% against the previous year. Similarly, Dat Xanh Real Estate Service and Construction Corporation witnessed its profit decline by a half due to the loss of over 16.5 billion dong in the last quarter.

The business results of ten property companies gathered by Saigon Times Daily show that the combined profits of all ten huge firms in 2011 are still lower than the profit of Sacomreal alone in 2010 and far behind the profit of Hoang Anh Gia Lai in the same year.

Most realty firms ascribed their dismal profits to the continued difficulties faced by the market and poor sales of products, while financial costs, specifically interest rates, put more pressure on many enterprises.

For instance, Thu Duc Housing Development Corporation (Thuduc House) had to pay an interest sum of 49 billion dong last year, a significant rise from 11 billion dong in 2010. Sacomreal had some 249.5 billion dong in loan interest payables in 2011, or an increase of 10% year-on-year.

Pressure of loan repayment, along with stagnant trade, has forced several property enterprises to discount their products in order to rev up demand as well as quickly recover capital to withdraw from the market.

Most real estate companies are now debtors to the banks. Therefore, to boost product sales to pay their debts is currently a big challenge to property enterprises.

In the outlook for the local property market this year, the analysts of VietCapital Securities predicted 2012 would be another tough year for the market given the liquidity crisis and property lending restrictions.

Market observers forecast the trend of project transfer would continue in 2012, and the market would hardly prosper as real estate credit is still tightened.

(Source: Saigon Times.)

Condo-for-rent market in dire need of incentives

2012-02-22T12:59:00.000+07:00

Developing the condo-for-rent market is seen as a new trend to meet housing demand but it needs government incentives, said relevant agencies.

The national housing development strategy until 2020 and a vision towards 2030 approved by prime minister Nguyen Tan Dung in late November last year sets the target of raising the country's per capita housing area to 30 square meters by 2030.

At a meeting held last week, deputy prime minister Hoang Trung Hai, who is also head of the Central Steering Committee for Housing Policy and

Real Estate Market, mentioned considering a pilot plan to launch condos for rent. He recommended setting up a policy or a mechanism to support corporate investors active in this segment.

Meanwhile, many people have expressed skepticism about the plan, saying it might be as unfeasible as the social housing programme unless the government plays a role in it.

Exploring local demand

Le Hoang Chau, chair of the HCM City Real Estate Association (Horea), said the condo-for-rent plan would help those whose financial capacity is not strong enough to buy commercial homes have accommodation at affordable rents.

Most apartment-for-rent projects on the market are mainly for foreign tenants as they belong to the high-end segment. In fact, it is the ground for foreign players such as Ascott, InterContinental and Norfolk. Therefore, it is difficult to search for a fullyequipped flat with a monthly rent of 2 million dong at this time.

If the handover of flats in the Bee Home project in HCM City's Tan Binh District in July is on schedule, C.T Group will be one of the first in the sector in the city to join the apartment-for-rent market.

The total construction area of Bee Home is 16,500 square meters. The project has two four-storey blocks with 315 condos of 30 square meters or above a unit. Like other commercial apartment projects, there are multiple facilities like a gym, kindergarten, library and restaurants in and around the buildings.

The developer hopes Bee Home will be suitable for a modern lifestyle of young homebuyers.

The firm offers tenants two levels of rent. For one, tenants will pay 278 million dong for a 12-year contract, or 1.93 million dong a month. For the other, the rent will be 144 million dong for a six-year long term, or about 2 million dong a month.

Apart from C.T Group, Le Thanh Company is targeting office workers as potential customers to develop condos for rent on Vo Van Kiet Boulevard in HCM City's Binh Tan District.

Le Huu Nghia, director of Le Thanh Company, said his firm would invest 50 billion dong to build an apartment building with 220 units covering from 30 square metre each.

This is his firm's step to explore local demand after a long time of developing commercial apartments for middle-income people, he said.

The monthly rent for serviced flats that are fully furnished ranges from 3.5 million dong to 4 million dong a unit, Nghia said, adding his company expected to break even eight years after this scheme is put into service.

Nghia's company has available land for the project but has yet to start work on the project due to the current gloomy housing market and capital shortages. It plans to start work on the project next year.

Chau of Horea said he was pinning high hopes on the condo-for-rent segment as demand for stable accommodation was high. The ratio of home tenants in other countries accounts for 80-85 percent while the figure in Vietnam is only 10-15 percent.

Government role is decisive factor

Leasing demand lies mostly in the medium-cost housing sector. Therefore, developing flats for rent will partly satisfy housing needs in the public. However, many people have cast doubt on the home leasing scheme, saying it might be short-lived without government support.

An architect, who declined to be named, said developing social (low-cost) housing was a responsibility of the government toward the poor. So the government should play a decisive role in the process.

He pointed out existing policies did not work and had failed to attract industry players to participate in the housing-for-rent market given their difficult access to capital and land.

Nguyen Van Danh, deputy director of the HCM City Department of Construction, in a meeting with Horea last week said incentives for social housing developers were not attractive. Because of little profit, Danh stressed, local firms mainly focus on commercial housing projects.

Chair Chau of Horea suggested the Ministry of Construction should treat developing apartments for rent as part of the national target programme for housing development.

From a business point of view, it is a tough job to persuade property developers to pour huge amounts of capital into projects that bring in meager incomes in the lifespan of the projects.

(Source: Saigon Times.)

FDI flows into property to surge

2012-02-22T12:57:00.000+07:00

Below is the interview on property market for 2012 between Lao Dong newswire and Marc Townsend, CEO of CBRE Vietnam.

Could you please predict or take on expectation of FDI inflow in property market this year?

Information concerning project transactions has now been made known widely making property market more and more transparent. Recent times have seen a dramatic decline in property prices making them more realistic, which would enhance more transactions among domestic investors and between local and foreign investors.

Capital inflows into the real estate market are, therefore, expected to surge. Moreover, large investment funds with significant projects are also eying Vietnam.

In the light of the market downturn, which is the best option- gold, securities or property-to invest money?

Property is not the investment channel that could produce immediate profits. I guess buyers would greatly benefit from the potentially huge supply of some 40,000 apartments as well as transparent market and developers' stronger commitments.

Who do you think will be put at a disadvantage in this market this year, buyers or sellers?

Both sellers and buyers have their own difficulties. For investors, capital related and financial issues which are in close connection with inflation, costs, construction materials as well as borrowing would be puzzling.

Also, inflation could hurt buyers who are always wondering whether or not it is convenient time to purchase and prices hit the bottom.

(Source: Vietbiz24.)

Vietnamese property firms record little profit

2012-02-21T11:54:00.000+07:00

Most property companies registered little profit last year as the gloomy market continued to adversely affect their operations.

A sharp revenue drop and a build-up of unsold products caused by weak demand in the apartment segment coupled with rising borrowing costs have led to poor results of realty firms.

Market leader Hoang Anh Gia Lai saw its profit plunge by 89 percent year-on-year, from 2.08 trillion dong in 2010 to 224 billion dong last year.

The group explained its subsidiaries no longer enjoyed profits generated by the parent firm as the latter is now only in charge of management.

Sai Gon Thuong Tin Real Estate Company, better known as Sacomreal, recorded a loss of nearly 40 billion dong in the final quarter of last year. The firm’s revenue from product sales and services in 2011 halved to 540 billion dong from 1.09 trillion dong in 2010.

Sacomreal’s profit was dragged down 83 percent to a mere 80 billion dong last year, against 485.5 billion dong in 2010.

Phat Dat Property Development Corporation didn’t fare any better.

The company in its financial statement reported its 2011 revenue totaled a mere 127 billion dong, a drop of 92 percent from 1.57 trillion dong in 2010. The company’s profit also dipped to 4.5 billion dong, equivalent to 1 percent of the 331 billion dong in 2010.

With the loss of over 225 million dong recorded in the last quarter of 2011, the whole year’s profit of House Vietnam Joint Stock Company dwindled by 96 percent compared to 2010.

Similarly, Dat Xanh Real Estate Service and Construction Corporation witnessed its profit decline by a half due to the loss of over 16.5 billion dong in the last quarter.

The business results of 10 major property companies show that their combined profits in 2011 are still lower than the profit of Sacomreal alone in 2010 and far behind the profit of Hoang Anh Gia Lai in the same year.

Most realty firms ascribed their dismal profits to the continued difficulties faced by the market and poor sales of products, while financial costs, specifically interest rates, put more pressure on many enterprises.

For instance, Thu Duc Housing Development Corporation (Thuduc House) had to pay an interest sum of 49 billion dong last year, a significant rise from 11 billion dong in 2010.

Sacomreal had 249.5 billion dong in loan interest payables in 2011, or an increase of 10 percent year-on-year.

Pressure of loan repayment, along with stagnant trade, has forced several property enterprises to discount their products in order to rev up demand as well as quickly recover capital to withdraw from the market.

Most real estate companies are now debtors to the banks. To boost product sales to pay their debts is thus currently a big challenge to property enterprises.

In the outlook for the local property market this year, analysts of VietCapital Securities predicted 2012 would be another tough year for the market given the liquidity crisis and property lending restrictions.

Market observers forecast the trend of project transfer would continue in 2012, and the market would hardly pick up as real estate credit is still tightened.

(Source: Tuoi Tre.)

Vietnam's home prices to fall 15 pct before rebound, CBRE says

2012-02-21T11:53:00.000+07:00

Vietnam's home prices may fall as much as 15 percent this year before the nation's property market starts attracting buyers, according to CBRE Group Inc.

"We will see a stop" to the decline in residential prices, Marc Townsend, managing director of the brokerage's local unit, said in an interview in Hanoi Thursday. "We begin to see confidence come back to the market."

Townsend said he expects some developers may not be able to survive. Many of them suspended new projects in the nation while prices dropped as property companies tried to accelerate the sale of their assets, Viet Capital Securities said in strategy report last month.

Vietnam tightened credit last year to choke off a surge in inflation, restricting loans for the real estate sector and raising interest rates. Growth in the $104 billion economy slowed last year and the government said it would keep tight monetary policy this year to curb inflation.

In 2012, more companies may bring their "distressed deals" to the market, Townsend said. "In the past, absolutely no one wanted to talk about selling building, selling land but now it becomes much more acceptable to talk openly about what of their portfolio may be available for sale, or joint-venture."

(Source: Bloomberg.)

Realty industry hindered by capital shortage

2012-02-19T20:01:00.000+07:00

Local real estate firms are facing a shortage of capital as they can’t easily access bank loans or borrow from their customers like before.

The majority of property firms only have about 20 percent of invested capital by using their own equities when developing fresh projects. This means they have to borrow money from banks and customers to cover the remaining necessary capital, with the ratio of banking loans accounting for the majority.

Due to this huge reliance on mobilized funds, the property market is especially vulnerable upon any monetary policy change, as seen in the current situation.

Credit applications from industry players are now not accepted by lenders, who themselves are having difficulty recovering debts from realty projects.

Due to the weak liquidity of the market, mobilizing capital from customers for new schemes is no longer easy either.

Meanwhile, attracting funds via the stock market has faced the same difficulty.

Several realty businesses that in 2009 and 2010 had decided to list shares failed to attract any fund from this channel last year as a result of the gloomy stock market.

A series of property firms were forced to cancel share issuance plans after failing to attract buyers.

The execution of many real estate projects has thus been suspended for lack of funds.

Tran Minh Hoang, chairman of VinaLand Limited, said property developers had to find their own ways to find funds. Transferring land to other partners is a recommended choice, Hoang said.

According to Hoang, land transferring is not a new trend as it has been seen in strategic investment cooperation among businesses under which a company will transfer its project partly or wholly to partners.

For instance, Singapore-based CapitaLand Limited has invested in a project of Khang Dien Co., in HCM City’s District 2 and another one developed by Quoc Cuong Gia Lai Joint Stock Co. in Binh Chanh District. Similarly, Him Lam Land has poured capital into the Hyco4 Tower scheme in Binh Thanh District developed by another.

Market observers predict the land-transfer trend will continue this year but say it is only feasible for totally new schemes rather than ongoing projects because complicated transfer procedures and the current economic downturn discourage merger and acquisition.

Meanwhile, Hoang of VinaLand said that realty trust investment funds and housing saving funds had yet to be deployed owing to the absence of support from the local financial system.

Since last year, high bad debt ratios coupled with weak liquidity have prompted many banks to distant themselves away from lending real estate schemes, especially new ones.

Truong Van Phuoc, general director of the Vietnam Export Import Commercial Joint-Stock Bank (Eximbank), said there was little room left for property credit growth at his bank.

It is because Eximbank now concentrates on four groups that are no longer treated as non-productive segments including low cost-housing projects, Phuoc said.

When asked about realty loans, a credit officer of the HCMC-based Bank for Foreign Trade of Vietnam (Vietcombank) revealed that his bank would only disburse funds for property projects the bank has earlier pledged to finance.

Nam A Commercial Bank’s general director Tran Anh Tuan said his bank mainly served healthy and potential corporate customers besides actively collecting debts from property businesses this year.

Tuan hinted at limited new disbursement for the property industry at his bank until the market recovers.

(Source: Tuoi Tre.)

Property firm predicts brighter market

2012-02-18T11:49:00.000+07:00

Property services firm CB Richard Ellis Vietnam predicts that more investors will be able to capitalise on opportunities in Hanoi's real estate market this year, as last year's tough market conditions ease.

"For some people, companies and individuals, 2012 will be a year when Vietnam finally becomes a reality," said CBRE Vietnam managing director Marc Townsend at the firm's fifth annual "Fearless Forecast" presentation in Hanoi on Thursday.

"If you've been listening to me and CBRE's research, you know that certain sectors have seen prices declining," Townsend said. "Some sectors have seen prices declining for over three years. There has been pain in the market, with cash flows being challenged as restrictions on capital flows came into place and buyer appetite faded."

But he noted that rising auto sales suggested that Vietnamese consumers had money to spend.

"Mirroring the growth in sales of entry-level cars, we expect more affordably-priced residential sectors, targeted at the growing middle class, to perform strongest," he said. "While the rate of home sales in Hanoi has been significantly lower than in previous years due to large new supply, the actual number of units sold was not below the historical average, suggesting demand potential."

Meanwhile, Townsend said, Hanoi's infrastructure was on its way to the next level. In the next four years, different areas of the city would be conveniently connected by new elevated highways, metro lines, and additional bridges. By then, the psychological barrier of traveling to the other bank of the river, or to certain suburban districts, would be lifted, bringing people and buildings closer.

He predicted that price levels in the Hanoi residential sector would start leveling off, following the trend in HCM City over the last few years.

"In regards to the property market, people are simply sitting on the sidelines. The price of gold is at an all-time high, and when that starts to fall, people will move out of gold and capitalise on their profit by going into real estate," he said.

As for the commercial property sector, Townsend noted that shopping centres outside of the central business district faced fierce competition. Further new supply in 2012 would mean more competition and more vacant retail space.

He also predicted that local hoteliers would continue to be active in the mergers and aquisations market, while international hoteliers maintained a long-term interest in the Hanoi market.

"The past 12 months have seen the growth of the institutional investment deal in Vietnam, with notable transactions occurring for foreign investors. We believe that these deals will pave the way for further activity in the years ahead, with 2012 being no exception."

With developers facing cash flow problems and many properties already viewed as distressed, he said the current market offered an opportunity for foreign investors.

(Source: Vietnam News.)

Vietnam’s largest city plans to help property firms clear stock

2012-02-18T11:48:00.000+07:00

Ho Chi Minh City’s government plans to utilize the large stock of unsold apartments in order to provide housing for relocated residents, an industry official said.

The city is considering buying apartments between 40 and 70 square meters as it prepares for key public projects that will require many residents to be relocated for land clearance, the news website VnExpress cited Chairman of the HCM City Real Estate Association Le Hoang Chau as saying.

He said it usually takes a few years to develop a new housing project for relocated residents. “If the city proceeds with this plan, it will have a large supply of apartments for relocation purposes on hand while helping developers clear their stock.”

Chau said city officials have not announced how many units they plan to buy, but have promised developers they will not have their profit margins reduced.

The city’s real estate market took a big blow last year after the government tightened the issuing of credit, making it difficult for both developers and homebuyers to take out loans.

According to VnExpress, there are no official statistics on the number of unsold apartments in the city. Officials have projected that approximately 83,000 families need to be relocated between 2011 and 2015.

(Source: Thanh Nien.)

HCM City considers buying apartments

2012-02-18T11:46:00.000+07:00

Ho Chi Minh City authorities are considering buying the unsold apartments of commercial projects citywide to supplement the municipal resettlement housing fund, the city’s property association has said.

HCM City’s Vice Chairman Nguyen Huu Tin had discussed such a policy with the association, said Le Hoang Chau, chairman of the HCM City Real Estate Association (HoREA), at the meeting with the association’s members this week.

The association has also been informed by the city’s construction department of the plan to purchase mid-sized apartments from 40 to 70 square meters each.

HCM City is now in need of building resettlement houses for households who will be relocated to clear sites for key projects such as the Thu Thiem New Urban Area, East-West Highway and Northwest Cu Chi Urban Area.

Still, a resettlement housing project will take a couple of years for completion, from site clearance to infrastructure construction.

Meanwhile, many property companies still have a considerable supply of available housing products.

Thus, if it’s carried out, the policy will add more units to the city’s resettlement housing fund while property firms are able to sell their products.

Le Chi Hieu, Chairman of Thu Duc Housing Development Corporation (Thuduc House), said this policy would bring good news to the market.

Chairman Chau of HoREA said the city’s government would ensure profits for project owners, and there was a high possibility that this policy would be deployed.

But it’s unclear how many units the city would buy.

Several enterprises however are concerned about how the city would pay for the purchase since the financial procedures would be cumbersome.

The central property management agencies have yet to publicize any official statistics on the unsold apartments on the national market. Nevertheless, a research of CB Richard Ellis Vietnam (CBRE) show there are over 18,000 unsold units in the so-called mid-end apartment segment alone as of last year’s end.

(Source: Tuoi Tre.)

Binh Duong eyes new low-cost housing project

2012-02-18T11:45:00.000+07:00

Construction of a large-scale affordable housing project will begin in the southern province of Binh Duong at the end of the month, according to Investment and Industrial Development Corporation (Becamex IDC), the project's investor.

Capitalised at 10.8 trillion dong (US$516 million), the housing project will span a total area of 130ha in Ben Cat District. It is expected to supply 64,700 low-cost apartments priced between 90-140 million dong ($4,290-6,700).

(Source: Vietnam News.)

Vincom to build resettlement area in Hanoi

2012-02-18T11:44:00.000+07:00

Vincom Joint Stock Co. recently received approval from the Hanoi People's Committee to compile an investment plan for a resettlement area covering 38ha in La Phu Commune in the capital's Hoai Duc District.

The area will be built to serve the resettlement needs of key projects in the city only.

Hanoi authorities requested the Vincom company to outline specific mechanisms of investment, capital mobilisation, management of the resettlement urban zone.

(Source: Vietnam News.)

Apartments in GreenBay project offered at 12.6m dong/ sqm

2012-02-18T11:43:00.000+07:00

Syrena Vietnam Production Investment and Development Joint Stock Co announced to inaugurate the model apartment for GreenBay Residential Complex sited in Hungv Thang new urban area, Bai Chay, Ha Long, Quang Ninh province.

The GreenBay Apartment Complex would be situated in Ha Long Marina urban area with total area of 287 hectares in Quang Ninh province.

The new apartment complex has total flooring area of 35,000 square metres, including six buildings with height of 17 storeys and 24 storeys. The apartments would have areas of 62-87 square metres, while offering price of 12.6 million dong per square metre.

The investors expected to hand over the finished apartments to purchasers in Q2 of 2013.

(Source: Vietbiz24.)

Investors remain optimistic about property market

2012-02-17T14:01:00.001+07:00

Many foreign investors consider the current downturn in the local property market an opportunity for them to jump in and stay ahead when the market recovers.

Many developers, particularly those who rely heavily on big loans from banks, are lamenting their current situation in which they cannot clear their stocks as buyers are holding a wait-and-see attitude toward the market.

Under pressure of paying debts, many of them fear that if the gloomy market is not improved, they’ll sooner or later go bankrupt.

However, for foreign investors, this is a good opportunity, despite high interest rates, credit restriction and inflation.

Current difficulties in Vietnam are short term because inflation is one of the things the Government has decided to tackle.

Observing Vietnam from outside, Dyer said the Government was doing necessary measures to reduce inflation, according to Colin Dyer, president and CEO of Jones Lang LaSalle.

Overall, Vietnam and the rest of Asia are on a growth path because rising population and urbanization can keep fueling commercial property markets.

David Lyons, Vietnam Country Head of Jones Lang LaSalle Vietnam, echoed Dyer’s view. He said Jones Lang LaSalle’s global network was recording a positive sentiment from investors, especially foreign ones who are coming into the market to sound out opportunities.

“We are seeing the property cycle in Vietnam now at or near the bottom…foreign investors say it is time to start to come in,” Lyons said.

Both experts reiterated the current difficult situation in the market, saying high interest rates make it hard to access banks’ credit. Across the board, not only development and investment companies but individuals are also seeing funds being dried out.

Given the difficulties, many cash-strapped developers have had to sell their projects and merger and acquisition activities are expected to continue to increase.

For instance, Daibiru Corporation, a commercial property owner and manager, entered into an agreement in late 2011 to acquire a company that owns the 18,000-square-meter grade A office building Saigon Tower on Le Duan Boulevard in downtown HCMC.

The deal is expected to be completed in January 2012.

Jones Lang LaSalle is reaching out its global network to search for potential investors for several projects that it acts as a broker such as the office building Centre Point on
Nguyen Van Troi Street, a multipurpose project named Royal Tower in the urban town Phu My Hung in HCMC’s District 7, and the Lam Son Square in the resort city of Vung Tau.

Lyons said his company was dealing with several international groups for those projects transactions. Most foreign investors come from within the Asian region, including Japan, Korea and Singapore because those investors understand the dynamic market.

Besides, the company is also getting inquiries from American investors. Those potential investors are interested in office buildings as well as industrial and logistic sectors.

Lyons said when more and more international investors were interested in Vietnam, it was the sign that the market has become more mature.

He thus expected the local property market to pick up again from the third quarter of this year.

Dyer seconded his colleague’s view, saying the market downturn was painful for short-term real estate companies and for the whole market, but it forced companies to restructure business and capital.

Office rent continues to drop.

Like other cities in the world, as office rent in HCMC’s central business districts has dropped by half, companies should move in to take advantage of the situation, Dyer said.

Office rent in HCMC is decreasing for 12 consecutive quarters with asking rent staying around US$32 – $43 per square meter for Grade A buildings, $14 – $32 for Grade B and $10 – $25 for Grade C.

According to the research team of Jones Lang LaSalle, current difficult market conditions are forcing some landlords, besides offering rental discounts or other incentives for long-term leasing contracts, to sell all or part of their buildings to recover their capital quickly.

Total net absorption in 2011 reached over 168,000 square meters, a decrease of 9.4 percent year-on-year.

In the last quarter of 2011, net absorption slumped across all grades, especially in Grade C and in suburban areas. This was probably due to office buildings in higher grades that offer attractive facilities, convenient locations, and increasingly competitive rents.

At the end of 2011, the market saw no new supply, thus the total stock of all grades in HCMC remained stable at over 1.3 million square meters. With more than 40 projects currently under construction with over 558,000 square meters, the total stock in HCMC is expected to double by the end of 2015.

Jones Lang LaSalle projected that this new level of supply would increase the vacancy rate in the HCMC office market, and thus rent could remain low in 2012.

(Source: Tuoitrenews.)

Challenge helps property market become more mature

2012-02-17T13:57:00.000+07:00

It is genrally agreed that with every challenge comes an opportunity, and the common saying is being used to talk about the local property market that has slid into difficulties since 2008.

Many developers, especially those who rely heavily on big loans from banks, keep lamenting their current situation because they cannot clear their stocks as buyers are holding a wait-and-see attitude toward the market. Under pressure of paying debts, many of them fear that once the gloomy market is not improved, they will sooner or later go bankrupt.

However, for many investors this is a good chance for them to come into the challenging market in a hope that they will stay ahead when the market is recovered from the downturn. High interest rate, credit restriction and inflation are problems real estate players, including foreign investors, are facing but those troubles are step-by-step being solved by the Government.

“Current difficulty in Vietnam is short term because inflation problem is one of things the Government has decided to tackle,” Colin Dyer, president and chief executive officer of Jones Lang LaSalle, shared his view to the Daily on the occasion of his first trip to Vietnam.

Observing the country from outside, Dyer said the Government was doing necessary measures to reduce inflation, and thus those problems would be short-lived. Overall, Vietnam and the rest of Asia are on a growth path thanks to having rising population and urbanization which can keep fueling commercial property market.

David Lyons, Vietnam Country Head of Jones Lang LaSalle Vietnam, echoed his president’s view, saying that the property services provider’s global network is recording a positive sentiment from investors, especially foreign ones who are coming into the market to sound out opportunities.

“We are seeing the property cycle in Vietnam now at or near the bottom…foreign investors say it is time to start to come in, and we see that trend,” Lyons told the Daily.

Both experts reiterated the current difficult situation in the market, saying high interest rate has prompted very hard access to credits from banks. Across the board, it is not only development companies and investment companies but also individuals to see funds dried out for property investment. As a result, the housing price has dropped, and office rent is on downward trend because of abundant supply.

Given the difficulties, the local property market has witnessed many cash-strapped developers have to sell their projects to others. The merger and acquisition activity is expected to continue increasing, which means that more and more property projects are to change hands this year.

Daibiru Corporation, a commercial property owner and manager, entered into an agreement in late 2011 to acquire a company that owns the 18,000-square-meter grade A office building Saigon Tower on Le Duan Boulevard in downtown HCMC. The deal is expected to be completed in January 2012.

Jones Lang LaSalle is reaching out its global network to search for potential investors for several projects that it acts as a broker. For example, the office building Centre Point on Nguyen Van Troi Street is being put up for sales after a local owner sold it to a Japanese fund, and now the fund has Jones Lang LaSalle to search for potential investors.

In another project, the property services provider is looking for suitable investors for a multipurpose project named Royal Tower in the urban town Phu My Hung in HCMC’s District 7. The 21-story building offers some 41,000 square meters for office and retail spaces and is expected for completion in June this year.

Besides, the company also acts as a broker for a commercial project named Lam Son Square in the resort city of Vung Tau.

Lyons said the company is dealing with several international groups for those projects transactions. Most foreign investors come from within the Asian region, including Japan, Korea and Singapore because those investors know and can understand the dynamic market.

Besides, the company is getting inquiries from American investors. Those potential investors are not only interested in office building sector but also industrial and logistic ones.

Lyons said there are developers looking to sell their projects to international investors. When there are more and more international investors looking into Vietnam, ‘that is the sign the market become more mature’.

Looking to the market trend, he projected that difficulties may be solved next year, and the local property market is hoped to go up again from the third quarter of this year.

Dyer seconded his colleague’s ideas, saying that the market downturn was painful for short-term real estate companies and for the whole market, but it helps companies to restructure business and capital to go through the difficult time.

Office rent continue softening

Like other cities in the world, as the office rent in HCMC’s central business districts dropped by half, it is the chance for companies to move in, to take some advantages to get good deals, Dyer commented on the office market in Vietnam.

Office rent in HCMC is on downward trend for 12 consecutive quarters with asking rent staying around US$32 – US$43 per square meter for Grade A building, some US$14 – US$32 for Grade B and some US$10 – US$25 for Grade C facilities.

According to the research team of Jones Lang LaSalle, the current difficult market conditions force some landlords, besides offering rental discounts or other incentives for long-term leasing contracts, to sell all or part of their buildings. This is an option for the developers to recover their capital quickly.

Total net absorption during 2011 reached over 168,000 square meters, a decrease of 9.4% year-on-year. In the last quarter of 2011, net absorption slumped across all grades, especially in Grade C and in suburban areas. This was probably due to office buildings in higher grades that offer attractive facilities, convenient locations, and increasingly competitive rents.

At the end of 2011, the market saw no new supply, thus the total stock of all grades in HCMC remained stable at over 1.3 million square meters. With more than 40 projects currently under construction with over 558,000 square meters, the total stock in HCMC is expected to be double by the end of 2015.

Jones Lang LaSalle projected that this new level of supply will increase the vacancy rate in the HCMC office market, and thus rents could remain on a downtrend in 2012.

(Source: The Saigon Times Daily.)

Property market needs solid legal footing

2012-02-17T13:54:00.000+07:00

The Vietnamese property market needs a legal system that can manage activities on the market and develop housing and apartment building for lease projects, said the deputy prime minister.

Deputy Prime Minister Hoang Trung Hai said while meeting the central steering committee of housing policy and real estate market on Tuesday that this year, the legal system for housing management and the real estate market should be completed, including property tax and prices, individual income from property trading, registration of property and mortgage of land use rights. Cities and provinces would manage housing policies and the property market based on those regulations.

"We could not manage an active and highly-competitive property market by administrative orders. The market needs a fully-complete system of legal documents. Additionally, the management offices should build database systems for housing and the real estate market," Hai said.

These issues are still weak. With further investment, the management offices could make better management decisions.

To ensure success in implementing the National Housing Strategy approved by the government, Hai asked the Ministry of Construction to issue documents that guide the national housing strategy that focus on research and development of rented properties.

Additionally, the ministry should find suitable investors and managers for developing rental properties to meet the high demand on this segment, said Hai, adding that a housing saving fund should be built to add an effective channel of providing capital to the property market.

The Deputy Prime Minister said the real estate market does not have a long-term capital mobilisation channel, while the only banking system is responsible for providing long-term capital for the market. So, the real estate market should soon find a new capital mobilisation channel to reduce reliance on the banking system.

The ratio of credit for real estate continues to be controlled by ensuring the inflation target.

Deputy Minister of Construction Nguyen Tran Nam said an important task in 2012 is to fund unfinished real estate projects, recover the market and the trust of customers in the market.

Nguyen Manh Ha, Director of Housing and Real Estate Market Management Department of the Ministry of Construction, said the ministry has proposed the house saving funds have two kinds. One kind is for low-income people getting loans to buy or lease social houses and the other is for middle-income people getting loans to buy commercial house. If the two funds get approval, these models will be built on trial at Ha Noi and HCM City.

At the meeting, Deputy State Bank Governor Nguyen Dong Tien said current price of property products was too high in comparison with affordability of the people and real value of property products. So, addition of capital to the market must be very careful.

According to plans set out each year, Viet Nam will develop an additional 100 million sq.m of new houses. But in 2010 and 2011, the country developed only 80-90 million sq.m of new houses each year.

Last year was a hard year for the domestic property market because of too high prices and tightening policies of credit for the market so there was low capital for development of property projects and buying of property projects.

The domestic property market was expected to recover this year with the addition of more investment from home and abroad, as well as a looser credit policy, experts said.

(Source: Vietnam News.)

The 10 records of real estate firms in 2011

2012-02-15T21:33:00.000+07:00

Here are the list of 10 real estate firms which made the records in their fields in 2011. Sixty nine shares out of the 694 shares now being listed on the stock market are belonging to real estate firms.

HAG: the enterprise which has the biggest profit

Though Hoang Anh Gia Lai Group HAG has been operating in different business fields, but real estate investments have brought the highest turnover and profit to the company. The finance report of HAG shows that the profit in the first nine months of 2011 of the holding company reached 903 billion dong. This is the highest profit a listed real estate company obtained.

VIC: the enterprise with the biggest total assets

The total assets of Vincom (VIC) have reached 33.289 trillion dong, according to the third-quarter finance report of the company. This is the company with the biggest total assets on the bourse.

However, the profit VIC gained in the first nine months of 2011 was 575 billion dong only, a modest level if compared with the stockholder equity of 6254 billion dong.

After VIC and VPL merge into each other to form up VIngroup, the stockholder equity of the new group will be over 10 trillion dong to become the enterprise with the biggest capitalisation value on the burse. VIC is also the share with the highest market price at 99,500 dong per share.

VIC: the enterprise with the sharpest profit increase

In the first nine months of 2011, VIC obtained the profit of 575 billion dong, an increase of 202.84 percent over the same period of the last year. The sharp increase in the profit of the company has been explained by the fact that the last year's profit was very low.

The enterprise, which specialises in developing high grade real estate projects, are now running many big projects.

The finance report of the company showed that the inventory level of VIC has reached 10.131 trillion dong, a five time increase over the same period of the last year.

IDV: the share that sees the biggest price increase

Of the 69 real estate shares being listed on the two bourses, only two saw the price increasing in 2011. Meanwhile, other shares saw the prices decreasing by 53 percent on average.

Meanwhile, IDV share of the Vinh Phuc Infrastructure Company increased by 28 percent in prices in 2011. However, IDV is just a small enterprise which had the trading volume of 1000 shares per trading session.

RCL: the enterprise with the highest EPS

The Cho Lon Real Estate Company is the enterprise with the highest EPS ratio in the first nine months of 2011, at 4911 dong.

ITC: the enterprise that incurred biggest loss

By the end of the third quarter of 2011, six enterprises had reported loss, accounting for 8.7 percent of total enterprises. In the third quarter alone, 14 enterprises reported loss, or 20.29 percent. ITC was the enterprise with the biggest loss of 81 billion dong

PVR: the enterprise with the lowest turnover

PVR's total turnover by the end of the third quarter of 2011 was modest, at 1.89 billion dong, while the stockholder equity was 581billion dong, and the total assets were 1.082 trillion dong.

VNI: the enterprise with the lowest capitalisation value

VNI is considered the tiny enterprise on the bourse. With the current price of 3900 dong per share, and the 10.36 million shares put into transactions, the total capitalisation value is 40.4 billion dong. The figure is much lower than the company's chartered capital of 100.36 billion dong.

HQC: the enterprise with the sharpest share price decrease

Hoang Quan Real Estate's share lost 88 percent its value when the share price dropped from 38,600 dong per share in early 2011 to 4700 dong in late 2011.

(Source: VietNamNet.)

Bad debts in real estate sector at 3.52pct: deputy governor

2012-02-15T21:31:00.002+07:00

Bad debts for the property segment as of 31 December 2011 accounted for 3.52pct of the total outstanding loans, according to Nguyen Dong Tien, deputy Governor of the State Bank of Vietnam. The ratio is on the downward trend and under close monitoring.

Property outstanding loans throughout the banking industry as of 31 December 2011 were estimated at some 201 trillion dong accounting for 8.45pct of the sector's total outstanding loans, a decline of 14.25pct over 2010, said Nguyen Dong Tien at the Central Steering Committee's conference on housing policy and real estate market early on 14 February The outstanding loans of the whole economy surged 9.02pct over the same period.

The central bank's policies in 2012 will be governed towards achieving the targets of the government and the national assembly, of which credit growth may hover between 15pct and 17pct, Tien added.

Credit institutions, meanwhile, will be instructed to adjust credit structure and enhance credit efficiency towards concentrating on funding production, agricultural and rural sectors and exporting.

In addition, credit to non-production and discouraged sectors are expected to be closely monitored. Yet, borrowers of such purposes as affordable housing construction for rent, for sale could enjoy more loosening loaning conditions. Strict surveillance of real estate loans would mainly focus on those for property investment so as to meet people's real demand.

(Source: Vietbiz24.)

Funds for realty industry stonewalled

2012-02-14T14:48:00.000+07:00

Local real estate trading firms this year have to keep struggling with capital shortage to survive the current dull situation as almost all the doors to capital for them have been slammed shut.

Industry insiders say much-touted policies on financial and monetary easing will not be available to them, while lenders even are seeking to recover funds already disbursed to property makers since years ago.

Continued mobilisation hardship

In fact, the majority of property firms only have about 20 percent of invested capital by using their own equities when developing fresh projects. This means they have to borrow money from banks and customers to cover the remaining necessary capital, with the ratio of banking loans accounting for the majority.

Due to this huge reliance on mobilised funds, the property market is specially vulnerable upon any monetary policy change, as seen in the feverish or frozen situations.

Credit applications from industry players are now not accepted by lenders, who themselves are having difficulty recovering debts from realty projects. Due to the weak liquidity of the market, mobilising capital from customers for new schemes is no longer easy like before.
Meanwhile, attracting fund via the stock market has faced the same difficulty.

Several realty businesses that in 2009 and 2010 had decided to list shares for better fund attraction failed to attract any fund from this channel last year as a result of the gloomy stock market. A series of property firms were forced to cancel share issuance plans for failing to lure buyers. Therefore, the execution of many real estate projects has been suspended owing to developers being thirsty for funds.

Tran Minh Hoang, chair of VinaLand Limited, said each property developer has to seek funds in their own way. Transferring land to other partners is also a recommended choice, Hoang suggests.

According to Hoang, land transferring is not a new trend as it has been seen through strategic investment cooperation among businesses so far, under which some company will transfer its project partly or wholly to partners.

For instance, Singapore-based CapitaLand Limited has invested in a project of Khang Dien Co., in HCM City's District 2 and another one developed by Quoc Cuong Gia Lai Joint Stock Co. in Binh Chanh District. Similarly, Him Lam Land has poured capital into the Hyco4 Tower scheme in Binh Thanh District developed by another.

Market observers predict the land-transfer trend will continue this year but insist it is only feasible for totally new schemes rather than ongoing projects. Complicated transfer procedures and present economic downturn discourage merger and acquisition activities, they point out.

Meanwhile, Hoang of VinaLand notes that realty trust investment funds and housing saving funds have yet to be deployed owing to the absence of support from the local financial system.

No access to banking loans

Since last year, high bad debt ratios coupled with weak liquidity have prompted many banks to distant themselves away from lending real estate schemes, especially fresh ones.

Truong Van Phuoc, general director of the Vietnam Export Import Commercial Joint- Stock Bank (Eximbank), states that there is little room left for property credit growth at his bank. It is because Eximbank now concentrates on four groups that are no longer treated as non-productive segments including low cost-housing projects, Phuoc explains.

When asked about realty loans, a credit officer of the HCM City-based Bank for Foreign Trade of Vietnam (Vietcombank) reveals his bank will only disburse funds for property projects the bank has earlier pledged to finance

Nam A Commercial Bank's general director Tran Anh Tuan asserts his bank mainly serves healthy and potential corporate customers besides actively collecting debts from property businesses within this year. Tuan hints at limited new disbursement for the property industry at his bank until the market recovers.

(Source: Saigon Times.)

Vietnam Real Estate Market: Capital-seeking Stimulus

2012-02-14T14:46:00.000+07:00

Tightened credit policy that favours a high restriction on loans for tightening non-productive areas to curb inflation has caused the Vietnamese real estate market to fall short of capital.

Therefore, a lot of investors have resorted to stimulus measures to raise funds to restart their projects.

Promotion race

According to a survey by Colliers Vietnam, the investor of Thang Long No1 project located on Thang Long Highway, is offering at 35 million dong per square metre. The project, which consists of two office towers and three upmarket apartment blocks, has a total area of 40,000 square metres. This will be a prominent landmark in the overall architecture and landscape planning of the space surrounding the National Convention Centre.

In addition, to stimulate demand, many investors continue with their hefty promotion programmes. Daewoo Cleve located on Le Trong Tan Street, Ha Dong District, is offering at 25 million dong per square metre. The investor of this project has collaborated with banks to provide soft loans bearing annual interest rate of 12 percent and buyers can borrow up to 25 percent of apartment value. Buyers pay interest on a monthly basis while principal payments are delayed to the end of the first quarter of 2014, when the house is transferred to buyers. This is a high-class international standard apartment close to major trade centres, financial centres, hospitals, international schools and local administrative bodies. Once completed, the project will provide the market with more than 4,506 apartment units.

Sky Garden located in Dinh Cong ward is also offering incentives to buyers in the first round of capital contribution. For quick capital recovery, the seller agrees to discount 10 percent if buyers settle 80 percent of the house value. The investor of Tan Tay Do Apartment project also offers a discount of 2 percent to its customers, while Green Park project presents interior furniture voucher worth 50 million dong. However, these demand-driven stimuli still turn out to be not attractive enough to customers.

Creating competitive product lines

According to experts, the Vietnamese property market is typical of supply and demand contradictions (supply rises but demand falls and vice versa). However, this seems not to be the case in 2012, because the wide gap between demand and supply has inflated the price of property assets like a balloon. In case of oxygen insufficiency, the balloon begins to deflate and possibly bursts.

Previously, many experts had warned against oversupply. Actually, at present, many projects have come to a halt due to capital shortage. According to market surveys, sharp drops are seen in high-grade segments. Prices have slid by 10 - 12 million dong per square metre. A few house deals with prices ranging from 35 million dong to 40 million dong have been reached recently. However, there is a little decline in downtown house prices.

It is obvious that investors must create product lines different from the rest of the market. First, they must launch more competitive prices. Second, they need to build houses with small areas which are affordable to more people.

(Source: VCCI.)

Oversupply of condominium to hit Hanoi's real estate market

2012-02-13T19:17:00.001+07:00

Ample supply of 21,000 apartments is likely to bring about price reduction in the quarter 2 of 2012.

It is estimated that 21,000 new apartments will be brought onto the market in 2012, which is appealing to buyers but stressful for sellers, according to Colliers Vietnam.

Two years ago, Euroland high-end apartment building in the European-Vietnamese Overseas Village in Mo Lao New Urban Area (Mo Lao Ward, Ha Dong District) was built with twin 30-storey towers and hundreds of adjacent villas. However, it is now hardly recognised among five towers of 30-40 storeys under Mulberry Lane project and tSTC under Sword Lake Plaza project.

Not so faraway is Van Khe New Urban Area with Usilk City Complex with 13 towers of 25-50 storeys and Van Phu New Urban Area with Deawoo Cleve project of 15 buildings of 36-40 storeys that is expected to provide more than 4,000 apartments in 2014.

Quarter 1 2012 will be the time for delivering houses of plenty of projects that were kicked off since 2007-2008 when property market bloomed. In the meantime, the pressure from the government's orientation of economic restructuring has dramatically driven prices of many apartments in Hanoi down by an average of 10pct-15pct and even 30pct since quarter 3 2011.

According to Colliers Vietnam's report on the property market in quarter 4 2011, the number of offered apartments for rent as well as successful transactions hit record low.

Around 4,500 apartments are estimated to brought onto the market this quarter, 40% of which are high-end apartments and 47pct are mid-range ones. TSTC of affordable prices and small areas have attracted a great deal of buyers' attention.

Apartments' prices are likely to reflect the real value and affordable housing will be available in 2012, according to Colliers Vietnam.

Credit squeeze together with restrictions on non-manufacturing loans with a view to tame inflation is expected to bring about capital shortage, which may result in many property projects being delayed, mortgaged or sold. At a result, housing prices could drop further in the first six months of 2012.

(Source: Vietbiz24.)

Bad debts situation amongst enterprises alarming

2012-02-13T19:16:00.000+07:00

Many companies in the real estate field have said that the payment between businesses and partners is now very difficult.

PetroVietnam Land Joint Stock Co (Petroland-PVL) has to delay 2011 dividend payment from February 10, 2012 to June 20, 2012 due to some debts of customers have not yet been transferred in the company's account as committed. Therefore, the company can not arrange capital sources for dividend payout.

Notably, enterprises in the areas of building materials and real estate who can not sell products are falling in very difficult situation, because they are the debtors, but at the same time they also are creditors of many other businesses.

(Source: Vietbiz24.)

Real estate developers struggle to collect money from buyers

2012-02-10T20:14:00.000+07:00

While many real estate developers feel worried stiff because their apartments have been left unsold, others feel worried stiff because they cannot collect money from buyers.

Though the real estate projects' owners have signed the contracts on selling apartments to customers, they still do not have money, because buyers cannot make payment on schedule.

Edward Chi, Chair of the Minh Viet Investment Company, said that the biggest worry now for real estate firms is the tardiness in collecting money from buyers.

At the Tricon Towers project in Bac Anh Khanh residential quarter in Hoai Duc district of Hanoi, the majority of apartments have been sold, but the investor has not collected money in the second and third payment phases as previously planned.

The investor tries to share difficulties with the buyers by offering some preferences, including the price discounts and the delayed payment timetables.

However, as the credit has been tightened, commercial banks refuse to provide loans, the liquidity has become seriously weak, and the investor cannot take back the investment capital as previously expected.

Tricon Towers is not alone. Failing to collect money is the worry of many other investors.

The Mulberry Lane project in Ha Dong district developed by CapitaLand Hoang Thanh, a joint venture between a Vietnamese and a Singaporean enterprises, has seen the first phase of construction finished, under which the foundation has nearly completed.

However, the investor complains that it is very difficult to collect money at this moment.

The investor may even have to face a lawsuit to be raised by the buyers, who said that the payment must be made in dong under the current laws, while the apartment sale contracts, signed in 2008-2009, comprise the provisions about the prices in the dollar.

The rumour that real estate developers can make a profit of hundreds of billions of dong has made it more difficult for them to do business, as people have turned their backs to the real estate market.

The market's difficulties have become so serious that most recently, South Korean Inpyung Group, the owner of Daewoo-Cleve high grade apartment project in Ha Dong district in Hanoi has to "belittle itself".

The investor lends money to the buyers at the preferential interest rate of 12 percent per annum, so that they can have money to make payment for the second and fourth phases of payment.

The sum of money Inpyung spends to stimulate the demand for its project may make nothing if compared with the huge total investment capital of 420 million dollars. However, the move can truly reflect the current situation.

While Inpyung has been facing difficulties with its project, another investor, also from South Korea - the investor of Keangnam Landmark Tower - proved to be luckier. It could sell 1000 apartments quickly at the prices of 3000 dollars per square meters.

However, the time when apartments can sell like hot cakes is over. Nowadays, real estate products have been selling very slowly despite the price discounts and preferential conditions in making payment.

CBRE, Knight Frank or Savills Vietnam, the most well known real estate service providers in Vietnam, all have reported that the liquidity of the real estate market in Vietnam has been decreasing steadily with the sales of the next quarter lower than the previous ones.

"The real estate market has never before been so difficult as nowadays," commented Nguyen Van Kha, Chair of the Tu Liem Urban Development Company, about the current situation of the market. Meanwhile, experts believe that the prices would decrease
further in 2012.

(Source: Vietbiz24.)

Experts differ about property market's prospect

2012-02-09T20:32:00.000+07:00

Some property experts expect the market to improve early this year though most say it will continue to face difficulties, at least to the end of the second quarter.

Some property experts expect the market to improve early this year though most say it will continue to face difficulties, at least to the end of the second quarter.

The optimists hold that government efforts will help the market recovery, saying now is the chance for buyers with actual demands for housing to make good bargains.

After the long Tet holiday, most property exchanges in Hanoi have resumed operation.

Some have signed their first contracts of the year for brokerage of apartments, residential land or semi-detached houses.

A representative of the property exchange Phuc Thinh in Hanoi said his office had successfully brought back two apartment purchase contracts in Dich Vong and Xa La on the first opening day after Tet.

Since early January, the two offices of this brokerage firm have won four apartment and land contracts compared to the five signed in the last quarter of 2011.

Explaining these positive signs, the representative said some investors deemed it good luck to make transactions at the beginning of a new year.

Meanwhile,those in need of housing are also taking advantage of the low season after Tet to look for houses at reasonable prices.

A popular area in Hanoi is Thanh Tri District, which is not too far from downtown.

Residents in Duyen Ha Commune, Thanh Tri District said that after Tet, many people had come to seek residential land and some successful transactions had been made.

Representatives of many other real estate trading floors in Hanoi show optimism about the market's short-term outlook.

However, property experts say the market may not prosper much this year since funding for the sector still depends heavily on the banking system. If interest rates are still high, the market cannot thrive.

Furthermore, Nguyen Van Duc, director of Dat Land Real Estate Co., said many cashstrapped investors would sell their projects to pay their debts. If the situation worsened this year, many investors would have to restructure their financing sources.

If the central bank flexibly and selectively relaxed its credit policy for the property market, and if proposals by ministries were approved by the government, the market could make some recovery, but not until the third and fourth quarter of 2012, said a representative of the Vietnam Real Estate Association. In fact, apart from a few small transactions, many big projects in Hanoi have not recorded positive changes in their sales.

A project on Kim Dong Street has attracted much attention because of the selling price of only 18 million dong per square metre, coupled with autos as gifts, to improve the sluggish pre-Tet sales.

Some 22,000 apartments of 60 projects will be launched in Hanoi this year, according to a report by CBRE. This will put more pressure on property developers as trading volume is expected to stay low and the percentage of successful deals insignificant.

Besides, they will have to compete with investors involved in land lot selling projects, who have pulled down their prices sharply in last year's fourth quarter.

CBRE said the future developments of the market would depend much on the recovery of the economy.

By the end of 2012, the housing projects whose prices are 21 million dong per square metre will stay resilient. Besides, the luxury projects in downtown Hanoi and HCM City will catch the attention of financially capable investors and families.

(Source: Tuoi Tre.)

Vietnam property market still unpredictable

2012-02-08T19:52:00.000+07:00

Most property experts have said the market will continue facing difficulties, at least to the end of the second quarter, while some expect the market will begin improving early this year.

Those in charge of business of the property projects hold a positive view that the efforts of the authorities and the banking sector will help pull up the market. They explain now is the chance for buyers with actual demands for housing to make good bargains.

The Saigon Times Daily’s observations show that after the long Tet holiday, most property exchanges in Hanoi have resumed operation. Some of them have signed their first contracts of the year for brokerage of apartments, residential land or semi-detached houses.

A representative of the property exchange Phuc Thinh in Cau Giay District, Hanoi says his office has successfully brought back two apartment purchase contracts in Dich Vong and Xa La on the first opening day after Tet. Since early January, the two offices of this brokerage firm have won four apartment and land contracts against the five signed in the last quarter of 2011.

In explanation of the prospering business since early 2012, the representative says some investors deem it good luck to make transactions at the year’s beginning. Meanwhile, those in need of housing make use of the low season after Tet to look for houses at reasonable prices.

Thanh Tri District is where Hanoi citizens aim at as this area is not too far from the downtown area. Residents in Duyen Ha Commune, Thanh Tri District say that after Tet, many people have come to seek residential land and some successful transactions have been made.

Representatives of many other real estate trading floors in Hanoi show optimism about the market’s short-term outlook.

However, property experts say the market may not prosper much this year since funding for the sector remains heavily dependent on the banking system. If interest rates are still high, the market cannot thrive.

Furthermore, Nguyen Van Duc, director of Dat Land Real Estate Co., says many cash-strapped investors would sell their projects to pay their debts. If the situation worsened this year, many investors would have to restructure their financing sources.

If the central bank flexibly and selectively relaxed its credit policy for the property market, and if proposals by ministries were approved by the Government, the market could make some recovery, but not until the third and fourth quarter of 2012, said a representative of the Vietnam Real Estate Association.

In fact, apart from a few small transactions, many big projects in Hanoi have not recorded positive changes in their sales. A project on Kim Dong Street has attracted much attention because of the selling price of only VND18 million per square meter, coupled with autos as gifts, to improve the sluggish pre-Tet sales.

Some 22,000 apartments of 60 projects will be launched in Hanoi this year, according to a report by CBRE. This will put more pressure on property developers as trading volume is expected to stay low and the percentage of successful deals insignificant.

Besides, they will have to compete with investors involved in land lot selling projects, who have pulled down their prices sharply in last year’s fourth quarter.

The property service provider says that the future developments of the market will depend much on the recovery of the economy.

By the end of 2012, the housing projects whose prices are VND21 million per square meter will stay resilient. Besides, the luxury projects in the downtown Hanoi and HCMC will catch the attention of financially capable investors and families with deep pockets.

(Source: Saigon Times.)

Hanoi property developers race to boost sales through discount programs

2012-02-07T14:13:00.000+07:00

The discount or sale-off programs of property projects, in such a gloomy market, are seen as brilliant idea to stimulate demand, the Lao Dong newspaper reported.

As from the beginning of 2012, a lot of real estate projects in Hanoi have offered promotion programs and cooperation with banks to support buyers.

Apart from the payment divided into many phases, Daewoo Cleve in coordination with banks to help house buyers borrow loans in Payment Phase 2 and Phase 4 with an amount of 25% of house value. Noticeably, the loans carried a soft interest rate of 12% per annum with monthly interest payment method and the principal will be paid as delivering houses in Q1 of 2014.

For Sky Garden project in Dinh Cong St (Hanoi), the investor also launched a preferential policy in the first capital contribution phase. Customers who pay 80% of property value will enjoy a discount of 10% of selling price. Especially, buyers will be funded up to 70% of capital through 3 years by banks.

Several common condominium projects also are racing to give gifts to attract buyers, such as a 2% discount or a 20 million dong voucher for buyers in Tan Tay Do Condo building, or a 50-million dong furniture package in Green Park project.

Generally, property project investors are aiming at real demanders whose budget is different from speculators’. So investors should have certain sharing with customers to boost sales and stimulate demand.

Mr Dang Van Quang, Director of Navigat real estate consulting firm, said that we should not be too pessimistic as the condominium market en mass offered discount, sale-off, or gift offering because in his opinion, reducing prices is an intelligent method to stimulate demand in such a gloomy situation like now.

Massive discount or promotion offering will push investors into risks. However, the market goes down, investors are forced to reduce expected profits. Even, after promotions, selling price may be back to principal investment cost, according to Mr Pham Thanh Mai-General Secretary of Vietnam Real Estate Association.

“In case of rising interest rates, increasing costs for construction materials or labour wage as well as other costs, projects may face big losses”, he emphasized.

The more importance, as said by Minister of Construction Trinh Dinh Dung, property firms need to restructure products which should be in medium and small size so as to be suitable with majority of real buyers.

(Source: Vietbiz24.)

Real estate firms decry new home tax

2012-02-06T10:29:00.002+07:00

The municipal Construction Department has proposed the collection of a housing tax in addition to levies collected on land, but real estate firms feel the time is not right for such a move.

The housing tax, which would be imposed on a progressive basis, aims to limit speculation, foster a healthy real estate market and generate more funds for the State budget, department officials have said.

Progressive taxation would mean those who own more houses would end up in higher tax brackets.

Some real estate firms and experts have expressed worries that the house tax would impose greater financial burdens on residents during tough economic times, the Thanh Nien (Young People) newspaper reported yesterday.

Experts say real estate speculation focuses on land, so the proposal envisages a kind of property tax, while high value assets like airplanes and yachts have not been taxed yet, according to the report.

It said most real estate companies thought this would not be the time to implement the housing tax proposal because it would make the situation worse for an already weak market.

Acknowledging that progressive housing tax would encourage land and house purchases for accommodation, experts said that the law allowed citizens to purchase these both for accommodation and as investment in assets.

Furthermore, there were already many real estate taxes, including a 2 per cent tax on land transfers or a 25 per cent tax on profits (based on current assessed value). The new proposal would cause prices to rise further, they contended.

"We need proper solutions at right time. If not, there will be serious consequences." said Nguyen Van Duc, vice chairman of the HCM City Real Estate Association.

(Source: Vietnam News)

Property developers start year with a bang

2012-02-03T16:16:00.002+07:00

Scores of property developers are eagerly embracing new projects amid a gloomy market outlook.

During the first day of the Lunar New Year, Vietnam’s leading state-owned building material manufacturer Viglacera Corporation began construction of its Dang Xa II new urban area over 39 hectares in Hanoi’s Gia Lam district with around 2.49 trillion dong ($118.5 million) total investment. The project, 12 kilometres from Hanoi downtown, envisages providing accommodations for around 15,000 residents.

According to Viglacera’s general director Nguyen Anh Tuan, once completed in 2016, the project could provide 352,598 square metres of floor space to Hanoi and be connected to Dang Xa I new urban area to form a modern integrated urban complex northeast of Hanoi.

Tuan added that Viglacera would capitalise on being a leader in manufacturing and supplying new building materials and join efforts with construction firms to shorten construction time and lower housing costs to fuel a dormant property market.

The second phase of Cat Ba Amatina, a hi-end tourism property project in Haiphong city’s Cat Ba township, was also launched on Lunar New Year first days. Vinaconex ITC general director Tran Ngoc Quang told that the current property market brought lucrative investment opportunities.

“In 2012, we would pursue secure investments with suitable products to match market fluctuations,” said Quang, adding that a Vinaconex ITC priority in 2012 was to foster cooperation with Cerberus investment fund which was chaired by former US Treasury Secretary John Snow in tapping Cat Ba Amatina project potential. Accordingly, a joint venture was founded between Vinaconex ITC and Cerberus to make the most of the project advantages.

“A difficult market is when developers could benefit from competitive costs from the part of contractors and material suppliers to save expenses, while the project quality is still secured. That is also a way developers share project added values with their customers,” said Nguyen Huu Nghia, a member of Hanco 9 Management Board.

Nghia said scores of young couples with accumulative saving of around 1 billion dong ($47,000) were hunting shelters, hence the opportunities are multiple for property developers targeting this customer segment with certain financial support schemes.

Hanco 9’s Berriver Long Bien apartment project, rolled out in late 2011, was reportedly warmly received by customers.

Tax and law consulting firm DFDL Mekong’s Real Estate Practice Group head Ta Chau said the property market could potentially be the fastest growth channel after a long sluggish period.

“I have positive views about Vietnam’s property market movements in 2012 in the wake of recent legal changes. The Ministry of Finance’s proposal to open real estate investment trust REIT, once being handled effectively, could provide a shake-up to the market in the coming period,” said Chau.

(Source: VIR.)

Property market awaits confidence to return

2012-02-03T16:12:00.002+07:00

The Tet holiday is over, and like other sectors, real estate companies have resumed business, starting a new year with old woes projected to stay ahead.

Some people say that if interest rates come down and banks start offering loans, perhaps the property market will start to recover in the late second half of 2012. On the contrary, if interest rates do not drop and the economy continues to suffer, the recovery may not take place until 2013.

Some chief executive officers of real estate companies shared their views with the Saigon Times Daily on the threshold of the Year of the Dragon. Excerpts:

Yip Hoong Mun, deputy chief executive officer of CapitaLand (Vietnam) Holdings Pte Ltd:

Vietnam is currently facing economic challenges with pressures from inflation and trade deficit, affecting every stakeholder including the investors and consumers. The current, high interest rate environment also affects the execution of real estate projects and purchases of properties by consumers.

CapitaLand is committed to being a long-term real estate developer in Vietnam. We remain positive over the long term prospects of the real estate market in Vietnam. Even during this difficult time, we continue to invest in the country. In May 2011, we committed a total investment cost of approximately 2.3 trillion dong (US$111 million) in the two new projects in HCMC with Khang Dien and Quoc Cuong. We believe that this current situation is a short term challenge for Vietnam and the confidence from the buyers will return.

We are well-positioned to ride on the strong growth potential in the mass market residential segment in Vietnam. We will build more value homes in Vietnam for the large number of genuine homebuyers. This will balance our residential portfolio while enlarging our target market to capture the mass market homebuyers in Vietnam. With CapitaLand’s strong balance sheet and financial flexibility, the current challenges will also provide opportunities for us to secure good investment opportunities in Vietnam.

Nguyen Thi Thanh Huong, director of Hung Gia Viet Real Estate Services Company:

Right in the beginning of 2012, the Government sent a message to offer solutions to recover the local property market and the securities market. The Ministry of Construction petitioned to pull a certain group of properties out of the list of non-production group [including real estate, securities and consumer goods], and suggested to turn on the credit channel to some specific property segments to respond to the real housing demand of many people. That shows the Government sees the important role of the real estate market which acts as one of the engines driving the economy moving forward, as well as creating jobs to the society. For that reason, I believe that the decline of the property market will make gradual improvement in 2012.

However, solutions to drive the local property market moving on a right direction and a sustainable development mode are what the market is looking for. The move will step by step revise the confidence in the market and clear up the channel for local and foreign investment sources to flow into the property market. If the Government does not bring forward drastic solutions in the first half of this year, the real estate market will continue to slide into difficulties, posing more financial burden on developers and choking off the liquidity because the market has suffered a prolonged gloomy condition.

I put all my faith in the little-by-little recovery of the market in the coming time because of a clear thing that properties are attached to the basic and indispensable demand of people. For the Government, the people’s social security demand must be ensured, and once social economic conditions improve, the demand in housing should be improved. The current housing standard of people is still low, around 14 square meters per capita. This is a chance for the local property market to grow. The important thing is how to balance the housing price and the payment capacity of buyers in mid and long terms. Capital from banks is just an option; the Government should quickly approve and issue regulations to create conditions for the establishment of Real Estate Investment Trust – REITs and housing economy funds. Those channels will supplement financial sources for property investment with a low cost of borrowing.

Chow Chee Fan, general director of Saigon Thuong Tin Tan Thang Real Estate Investment Joint Stock Company:

The property market recovery in Vietnam is quite complicated, and not only relies on bank interest rate coming down and banks starting offering loan. It should be a chain relationship between the overall economy recovery, corporate performance and the prospective and confident level of property investors/buyers. Of course the interest rate reduction will ease the burden of all the companies especially for those companies with heavy loan on hand.

With the bank interest rate reduced, the property market will not recover immediately. I would think that the property market will take a transition period of six months after the reduction of interest rates. Then another six months should only show slight improvement of the property market.

However, property (housing) is a necessity in our life, especially in Vietnam (HCM City) still with a shortage of houses in general. Everyone must have a roof to cover. People will hold on to purchase houses when the market is soft. But they cannot hold on for too long, and surely will jump in to buy houses when the time is right.

From my observation, the property market in the first half of 2012 still wouldn’t be good. The second half will see very slight improvement, while the first half of 2013 will see some recovery, and peak by end of 2013 to beginning of 2014.

However, those reputable developers with strong financial ability and good concept development will gain the highest advantage when the market recovers.

(Source: Saigon Times.)

Real Estate Market: In Search of Effective Fundraising Policy

2012-01-20T20:24:00.003+07:00

While global economic recovery is lethargic due to financial difficulties of leading economies, Vietnam issued new land management, fiscal and monetary policies in a bid to bolster macroeconomic stability. With respect to real estate field, the introduction of Decree 71/2010/ND-CP of the Government has created positive effects upon property investment and business.
However, in practice, this policy also limits cash flows into real estate because of relatively stringent and rigid rules on fundraising. To learn more about this, Journalist Do Son of Vietnam Business Forum Magazine has an interview with Mr Nguyen The Diep, Vice President of the Vietnam - Germany Small and Medium Business Association, and President of Reenco Song Hong Investment Joint Stock Company.

What is your assessment of the positive effects of Decree 71 dated August 8, 2010 on real estate investment and business?

Real estate business requires huge financial resources. No matter how big a property company is, capital availability is limited. Therefore, they have to mobilise capital from outside sources like credit institutions, organisations, individuals and households to have enough resources for their business operations. Nonetheless, the introduction of the Decree 71 in lieu of the Decree 90 largely affected capital mobilisation of companies. But, it is undeniable that this ruling has certain positive effects on property market. In my opinion, the Decree 71 has three major positive differences in mobilised capital management of investors over the Decree 90:

Firstly, investors can mobilise capital by issuing corporate bonds, nonbanking institutions (investment funds, financial companies, etc.) and certainly loans from commercial banks.

Secondly, primary investors can transfer a part of their projects attached with infrastructure to secondary investors when their projects have completed site clearance.

Thirdly, property project investors can mobilise capital from individuals and organisations to build houses on profit-sharing or production-sharing principles on the basis of negotiation and sharing. But, this approach is not allowed to exceed 20 percent of total products of individual projects. Previously, according to Decree 90, investors entered into capital sharing or lending contracts before fixing products and executing.

So, Decree 71 will have positive impacts on the real estate market in some of the following aspects. Firstly, investors can develop capital sources and increase capital healthily and transparently. Secondly, the Decree specifies the time for evaluation and approval of projects. Housing projects with less than 500 apartment houses will be decided by district authorities and the time for this process is no more than 30 days. Hence, the supply of the property market will increase, helping balance supply and demand, ease local fevers and reduce risks for end customers. The process of making financial capital sources healthy is also a good element for the market, as fundraising must be carried out in a clear framework, not free as earlier. As a result, property investors will have better ‘health’ in the future.

But, it is said that this policy inhibits capital from flowing into the real estate market. What is your opinion about this?

That’s correct. Relatively restrictive regulations on capital mobilisation provided by Decree 71 and Circular 16 affect the rights to mobilise and attract investment capital. Specifically, these regulations provide lending from credit institutions and investment funds while not mentioning loans from other institutions and individuals. Investors are also not allowed to issue bonds attached with the preference rights to purchase apartment houses. These reduce the appeal of projects in the eyes of business partners. Worse, the time of raising funds for projects according to profit-sharing principle or production-sharing principles prevents investors from forming business cooperation with other partners in accordance with the Law on Investment.

In addition, the unclear definition of “mobilising a maximum of 20 percent” leads to different interpretations. Decree 71 and Circular 16 do not define what capital mobilisation means, but only apply the method of itemising contracts to define capital mobilisation. Using the itemisation method is not enough, because it drops many types of contracts as provided in Civil Code 2005, like the deposit contract which provides the guaranty of future contract signing and enforcement.

The business cooperation contract signing clause stipulates that in case of not having certificate of ownership rights and not receiving houses, business cooperation parties are not allowed to sign contracts with the buying and leasing parties, but transfer such contracts to investors to sign. This provision will raise difficulty for all concerned parties, reduce the autonomy of business cooperation parties, increase the responsibility of investors, and in fact cause disputes in case investors swindle.

According to Article 63 of Decree 71, authorisation contracts are not permitted for public notarisation for the purpose of restraining multiple transfers of houses. Nevertheless, such a regulation is not really fair to both investors and buyers because the trading of property products brings profits for investors. Therefore, this is also regarded as an important legitimate channel of capital mobilisation.

Notably, while a series of barriers in the Housing Law and the decrees guiding the implementation of Law on Real Estate Business are not eased, the ongoing credit squeeze will send the market to the hands of foreign companies. Decree 71 plus the tight credit policy provided in Circular 13/2010/TT-NHNN, which specifies that the risk ratio of credit to property investments is lifted to 250 percent from 150 percent and the ratio of credits for nonmanufacturing sectors like securities and real estate is reduced, has caused serious impacts on the real estate market and the economy as a whole.

It is believed that this is a war of life and death, but it will make the market better. I think this is right but insufficient, because the current situation is the upshot of many previous regulations and policies.

Do you have any recommendations to rescue the property market?

I think the most important thing is to improve macro management mechanisms and policies, and to ensure the maximal exploitation and mobilisation of domestic and foreign financial resources for housing development, property market development, and sustainable economic development.

Up to 70 percent of Vietnamese real estate businesses are small and medium-sized. Thus, many may collapse as a result of Decree 71 and tightened credit policy. State agencies should issue policies to balance and sustain development.

(Source: VCCI News.)

Real estate trading busier prior to Lunar New Year

2012-01-20T20:18:00.001+07:00

Contrary to the fact that the real estate market was expected to remain sluggish, few days prior to Lunar New Year, a lot of real estate transactions were witnessed in the market, the local newswire VTC News reported.

Typically, Dream Town condominium project (in Tay Mo, Tu Liem Dist, Hanoi) of Dai Mo Construction Machinery Joint Stock Company attracted many customers who have real demand. Located in National Road 70, the project was offered at the suitable price of 17.8 million dong per square meter (VAT exclusive).

The first offering of Dream Town was opened in the midst of December 2011. According to the investor, 75 of 95 apartments were sold in this phase.

Lately, Sky Garden project at No 115 Dinh Cong, Hoang Mai Dist (Hanoi) is invested by Van Thai Group. It is a complex of offices, trade centre and high-class apartments with many advantages which investors are interested in.

The project is designed on good location, modern architecture towards green space and friendly environment. Especially it is offered at soft price of 18.1 million dong per sqm (VAT exclusive). The price is seen as very attractive and much lower than the projects in the same location Hoang Mai Dist.

Therefore, in the first offering day (January 15) on Cen Group floor, the project sold 30 out of 40 condos.

Similarly, some other projects also gained robust sale in the end of Lunar New Year 2011, namely An Binh Tower of Hanoi Agricultural Investment and Development One Member Limited Company at 15.5 million dong/sqm and customers are able to do down-payment in three years. Such a price is matched with affordability of many people, especially those who are living in neighbouring areas and demanding to improve their living space.

Meanwhile, 32 penthouses in CT5, Xa La urban area (Ha Dong, Hanoi) have the small areas of 35, 41, 47, 56 and 60 square meters each unit with a price of 11.5 million dong per sqm. Such kind of small houses are marketable at this time.

Opportunity for adventurous persons

Mr Pham Thanh Hung, Deputy General Director of Cen Group said that the robust transactions of some property projects in these days prior to Lunar New Year 2012 were attributed to suitable features (price, planning and quality in addition to some promotions and favourable payment methods) of products towards to real demanders.

So, a lot of customers decided to pour capital to buy these houses.

Currently, only the segment of medium-cost condos at 10-15 million dong per sqm has high liquidity whereas other segments are frozen, Mr Le Hoang Chau—Chairman of HCM City Real Estate Association was quoted as saying.

“Extended payment time, interest rate support, and profit commitment are launched by enterprises to stimulate demand and the method seems to be matched with the gloomy market”, he added.

Pham Sy Liem—Vice Chairman of Vietnam Construction Association also said that now is right time to purchase. The prices of property projects continue declining or not, no one knows.

Vinaconex Xuan Mai Concrete and Construction Joint Stock Co (XMC) and Becamex Binh Duong proposed the idea to build 30-sqm houses at 130 million dong in the southern province of Binh Duong and 150 million dong in Hanoi. The idea is feasible once construction land is assigned by the state (meaning that land cost is free).

If investors have to buy land, the 30-sqm housing project at 150 million dong per unit is unfeasible.

“I think that opportunities never come to those who are not adventurous”, Mr Liem said.

(Source: Vietbiz24.)

Real Estate Market 2012: Opportunities for Foreign Investors

2012-01-19T22:42:00.001+07:00

For real estate and securities investors, the year 2011 was a nightmare as their investments dropped dramatically in value. The year 2012 opens to wave farewell to the past dark year, and investors have reason to believe in a brighter year.

Waiting for new interest rates

What property companies will watch at the advent of 2012 is probably the interest rate signal. As known, one of the primary reasons for the real estate market freeze is the exorbitant interest rate of over 20 percent per annum and the tight access to bank loans.

This reality forced capital-thirsty companies to borrow 'black credit' at an interest rate of 27 - 28 percent per annum.

The investor confidence eroded away because of inappropriate macroeconomic management mechanism. Many investors had to sell off their assets to shift into other business areas.

Perhaps, the belief is not full but the government's commitment and determination to bring down inflation to less than 10 percent in 2012 is also a foundation to keep the trust of investors. According to an economist, if Vietnam can maintain macroeconomic stability, interest rates may be reduced to 12 percent per annum. This is within reach if Vietnam can keep inflation at a single-digit growth. Therefore, lending rates will drop to 15 to 17 percent. Such rates are acceptable for most investors.

While the sign of interest rate reduction has not appeared, to deal with capital thirst, investors have decided to sell off their assets and launched end of the year promotion programmes. However, this method only works in popular segments with prices affordable for a majority of buyers. In the meantime, there is no sign of recovery in highend segments.

According to Nguyen Quoc Khanh, President and CEO of DTJ Real Estate Distribution Company, the current development of real estate market will depend largely on interest rates. Housing demand remains very high but financial shortage is a common dilemma.

If interest rates decrease to reasonable levels, people will lend more to buy houses. This will help warm up the market and prevent the downward spiral of property prices.

Opportunities for foreign investors

The sharp fall in liquidity in 2011 has inhibited foreign investors from investing in real estate projects in Vietnam.

Phan Huu Thang, former director of Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI), said: The apprehension of foreign investors is translated into their investment value.

In 2008, foreign direct investment (FDI) into real estate sector reached set a record of over $23 billion but it strongly dropped to just $7.4 billion in 2009 and $6.84 billion in 2010. But, the real estate sector caught the largest amount of FDI capital. In 2011, FDI capital into property market plunged sharply.

According to FIA, in the first 11 months of 2011, Vietnam licensed 919 new FDI projects and allowed 324 existing projects to hike their investment capital. Specifically, the real estate market drew just $464.13 million, ranking fourth after processing - manufacturing industry; power production and distribution; and construction (more than $1 billion each).

(Source: VCCI.)

Luxury real estate market still attracting buyers

2012-01-19T22:39:00.002+07:00

While many investors are struggling to seek way-out for their apartment projects, the luxury property segment still has customers who are looking for villas worth several millions of US dollar, the Saigon Economic Times reported.

In Q4 of 2011, Phu My Hung Co explored the reaction of the market by introducing Chateau luxury villa project with 35 independent villas and 12 associated villas that are designed with area of 510-770 square meters each.

After only two months of offering, more than a half of 47 villas at 37-90 billion dong each were ordered. Cheteau project includes total 103 villas, which is expected to be finished (phase 1) by Q1 of 2013.

Given assessment on the move of the market segment, Savills Vietnam market research company that good infrastructure in Phu My Hung urban area was one of attractive factors for buyers despite the real estate market remained gloomy.

The villa and associated housing market in HCM City has total 3,100 units, located in the districts of 2, 7, 9 and Nha Be. The foundation land supply is in the districts of 8, Binh Chang and Thu Duc.

Villa price range in the secondary market is very large, between 4.7 billion dong and 87 billion dong per unit while the price of associated houses is 2-15.5 billion dong/unit.

In the market segment, according to Savills, good product quality, modern infrastructure and environment in addition to investor’s brand name are attractive factors for prospective buyers.

Savills forecasted that there would be 140 villas and associated houses with total area of 8,700 hectares, supplying 60,000 units to the market in next 8 years.

(Source: Vietbiz24.)

Hanoi and HCM City to have additional 23,400 apartments in 2012

2012-01-04T08:08:00.000+07:00

In 2012, the apartment supply will increase additional 20,000 units in Hanoi and 3,400 units in HCM City, according to Savills Vietnam’s research report on real estate market.

Regarding the demand power, the report also showed that the absorption ratio of the apartment market decreased clearly, to stand at 15% in HCM City and 32% in Hanoi.

For ground land segment, the figure became more tragic due to the frozen market. The absorption ratio in the third quarter of 2011 was at 4% and the price continued to fall.

(Source: Vietbiz24.)

Apartment and ground land prices in Hanoi drop 10-20pct in 2011

2012-01-04T08:03:00.001+07:00

Condominium and ground land prices in Hanoi in 2011 decreased 10-20% from 2010, according to Deputy Minister of Construction, Nguyen Tran Nam.

Particularly, real estate market report in 2011 built by the Ministry of Construction showed that in the first 10 months of 2011, the condominium price in Hanoi declined 3-8% from 2010. However, in comparison with January 2010, the fall was 1%.

The condominium price in Ha Dong district was average at 20-22 million dong per square meter and it was 30-35 million dong/s.qm in Tu Liem district. Some newly-started projects were offered at 5-10% lower than the condominium price of the same type.

The ground land price, including adjacent house segment and villas in the west of Hanoi from early 2009 till the end of 2010, increased strongly 60-70% and some projects doubled. By October 2011, the ground land price of most projects declined 10-20% from December 2010, and even over 20%. However, it still remained unchanged if comparing January 2010.

The ground land price in Gia Lam district area reached average 55-65 million dong/s.qm, 45-50 million dong/s.qm in Ha Dong and especially at 90-95 million dong/s.qm.

Some projects with low price and in outskirts area such as Me Linh and Gia Lam saw negligible declines but transaction volume decreased significantly.

(Source: Vietbiz24.)

Price cuts fail to enliven property market

2012-01-04T08:00:00.000+07:00

Vietnam’s real estate market is in a funk so bad that several drops in prices have not brought any cheer to buyers.

According to the Ho Chi Minh City Real Estate Association, with home prices falling continuously, many buyers are adopting a wait-and-see approach, hoping prices would drop further.

This is a “dangerous” situation for the real estate market, signaling an even more difficult year ahead for developers, the association said.

Some companies may resort to lowering prices to boost sales before it’s too late, it added.

Nguyen Van Duc, the association’s vice chairman, said not a single real estate firm is earning profit at this point. Developers have no choice but to accept losses and try to survive these times, he said.

But the association warned that cutting prices is not an easy task.

Chairman Le Hoang Chau said home prices in Vietnam have been high because of high construction and borrowing costs as well as the large amount of money developers have to spend on land clearance and land use rights.

Then, it also takes a long time to go through all the administrative procedures, causing the total cost to surge further, he said.

Analysts say Vietnam’s property market has gone through one of its worst years. Some say the credit squeeze imposed on the sector throughout most of 2011 has left developers and homebuyers struggling financially. Others blame the ongoing slump on an oversupply of luxury and overpriced products that failed to meet the real demand of most Vietnamese buyers.

Construction Minister Trinh Dinh Dung has said the market could stay in the downturn for at least another six months.

The housing markets in both Hanoi and HCMC will continue to see price falls in 2012, according to global property consultant Knight Frank. Residential prices in the two Vietnamese cities will fall by 5 to 10 percent in 2012, after an estimated drop of 10-20 percent in 2011, the company said in a global forecast earlier this month.

Not only developers but investors who try to earn profit from buying and reselling properties have been left high and dry by the market downturn.

An investor in Hanoi who wished to remain unnamed said she had paid 80 percent of a luxury apartment but she could not find money to pay the rest.

“I was stuck. I had to sell it at VND20 million per square meter even though I paid VND20.5 million in the first place,” she told Thanh Nien.

Many other investors, unable to access bank loans, faced the same situation. But even with price cuts of recent months, buyers are still shying away.

Pham Thanh Hung, deputy general director of Century Group, a real estate services provider, said there were many reasons why people were deciding to sell their properties at very low prices, including lack of confidence in the market and high taxes. But most of all, it was because they no longer see real estate as a lucrative investment channel and want to consider other options, he said.

Real estate prices can continue to fall, Hung said, adding that prices will reach a level that is more reasonable to homebuyers.

The director of a major bank in Hanoi said his bank will sharply reduce credit to real estate and focus on export and production sectors.

“If we continue to offer real estate loans, the procedures will be tightened up and interest rates will be higher,” he said. “We need to change our business strategy because it will be tough for the property market in 2012.”

A senior executive at Agribank also believed the real estate market would not be able to pick up any time soon.

“The market can start heating up only when the economy expands at a fast pace. But now the government has decided to go with a reasonable GDP growth, if not a lower growth than many past years, in order to restore economic stability,” he said.

“As a result, it’s unlikely the real estate market can recover in 2012,” he told Thanh Nien newspaper.

(Source: Thanh Nien.)

Top ten outstanding real estate events in 2011

2012-01-04T07:51:00.000+07:00

In 2011, Vietnam’s real estate market faced many challenges caused by the tightening credit policy aimed at stabilizing macro economy.

1. Resolution No 11 to tighten credit for real estate sector

Implementing the government’s Resolution No 11 dated on February 24, the State Bank of Vietnam (SBV) issued a Directive No 01 to tighten credit growth for non-production sector, especially for real estate and securities to 22% as of June 30, 2011 and 16% as of December 31, 2011.

After this decision, non-production credit dropped sharply from 431 trillion dong (accounting for 19% of the total credit for the whole year 2010) to 357.7 trillion dong, equaling to only 14% of the total credit as of August 2011.

Credit for real estate also declined from 235 trillion dong as of the end of December 2010 to 211.3 trillion dong.

The central bank’s tightening monetary policy has affected heavily the market, a series of realty projects had to reduce prices and many realty firms had to post losses and could not pay for bank loans.

2. Four real estate credit groups were excluded from non-production credit

Facing the deadlock of the real estate market, in the document on implementing credit for the last two months of 2011 dated on November 14, the central bank excluded four groups of real estate credit from the non-production sector.

Accordingly, those are loans for repairing and purchasing houses for living by using salaries and wages to pay for debts, loans for construction to serve low-income earners, loans for building houses for workers and loans for housing projects that will be completed, handed over and put into use before January 1, 2012.

After this decision, some banks such as Ocean Bank and VietABank offered preferential credit packages for house purchasers or continued to finance unfinished real estate projects.

3. Decline in FDI (foreign direct investment) capital in real estate sector

As reported by the Overseas Investment Department under the Ministry of Planning and Investment, as of November 2011, the total FDI capital for real estate sector reached $464 million.

Meanwhile, in 2008, FDI capital for real estate sector reached $23 billion, increased 49.5 times compared to November 2011 and it was $21.48 billion in 2009, rising 46.3 times and $6.8 billion in 2010, increasing 14.6 times.

The figure of $464 million worth of FDI capital for real estate sector in Jan-Nov 2011 was a record low level in the past five years. The reason was due to big funds faced difficulties in finance so they could not continue to expand investments but only focusing on completing the unfinished projects.

In addition, the market liquidity remained low and the real estate price of Vietnam declined sharply, leading the less attractiveness of Vietnam’s real estate market to foreign investors.

4. Prime Minister approved master plan for Hanoi

The Prime Minister Nguyen Tan Dung on July 27 approved a master plan for Hanoi whereby the capital city will include central urban area and five satellite urban areas. Towns will be connected by ring roads to incorporate centripetal axes.

The central area will be expanded from the inner city area to the southwest of the ring road 4 and to the north of Me Linh area, Dong Anh and the east to the areas of Long Bien and Gia Lam.

Five satellite towns include Hoa Lac, Son Tay, Xuan Mai, Phu Xuyen and Soc Son. Each city has mixture functions and characteristics with relatively independent activities to support and share with the central urban area in housing, training, industry and services.

5. Prime Minister approved national housing development strategy to 2020 and vision till 2030

The Prime Minister, Nguyen Tan Dung, on November 30 approved the national housing development strategy to 2020 and vision till 2030.

Accordingly, the strategy set a target to increase the proportion of condominiums, promote the development of house for lease in urban areas, including cheap house for lease invested by the state and commercial houses for lease invested by companies with support from the state.

The strategy also targets to build about 100 million m2 of floor each year, including minimum 20% of floor area for social policy beneficiaries and low-income earners.

6. Hanoi announced the first pilot urban railway route plan

By early August 2011, Hanoi announced the first pilot urban railway route plan, passing through Nhon-Hanoi railway station. Earlier, in September 2010, the fourth bidding package of the project was kicked off construction.

The total length of the main route is 12.2 kilometres, the overhead section is 8.5 km long and the subway route will be four kilometres long. The total initial investment capital is 783 million euro, including 280 million euro loan worth of ODA (official development assistance) from France. However, after building detailed design, the total investment increased to nearly 1.3 billion euro.

The roadmap will be Nhon-National Highway 32-Cau Dien-Mai Dich-intersection with ring road 3-Cau Giay-Kim Ma-Giang Vo-Cat Linh-Quoc Tu Giam-the ending point of Hanoi Railway Station.

As expected, the route will be completed in early 2015.

This is the railway route No 3 of the total five urban railway routes in Hanoi. The remaining routes include the route No 1 from Ngoc Hoi-Nhu Quynh, the route No 2 from Noi Bai-Thuong Dinh, the route No 4 from Dong Anh-Me Linh and the route No 5 from West Lake-Hoa Lac.

7. Construction work starts for entertainment complex area with biggest investment capital in Vietnam

Phu An Infrastructure Development and Construction Investment Joint Stock Co (under Khang Thong Group) on February 14 started construction on Happyland Vietnam project.

Happyland entertainment complex is located in Ben Luc district in the southern province of Long An. In the first phase, the project will use a clean land area of 338 hectares. The total investment for this project was nearly $2 billion, including $600 million for theme park area.

HappyLand Vietnam entertainment complex area is expected to complete on April 24, 2014.

In 2011, together with HappyLand project, there were also some other noticeable projects such as Saigon M&C project in HCM City (capitalized at $200 million), Time Square high-class apartment-hotel complex project (total investment at $125 million) or SJC Tower with $140 million.

8. 35% discount for PetroVietnam Landmark apartments

By the end of October 2011, PetroVietnam Real Estate Joint Stock Co (PVL) announced to give a discount of 35% for 85 apartments of PetroVietnam Landmark project, the price after the discount was only 15.5 million dong per square meter. As estimated, the company may suffer a loss of about 70 billion dong from this discount.

The reason for the discount was due to gloomy real estate market, high lending interest rate and at the same time, PVL’s loan worth 100 billion dong from Lien Viet Bank fell due.

This was the most prominent and typical event in the common tendency of reducing price in the real estate market in the last months of 2011 in the context that many banks faced difficulties in liquidity and they had to recover debts.

Following PetroVietnam Landmark, the price of some other projects also fell such as VP3 apartment project in Linh Dam peninsula decreased 22% in price and CT6 Xa La condominium project in Hanoi also declined 23%.

9. Ministry of Construction proposed to expand buyers of low-income houses in Hanoi

In early September 2011, Ministry of Construction proposed Hanoi People’s Committee to expand the buyer of low-income houses in the city.

The reason was due to the supply of low-income house has been supplemented but many projects did not attract customers. On the other hands, the regulation that the low-income house buyer must have long term permanent residence in Hanoi limited the number of buyers.

In 2011, in Hanoi, some low-income house projects were opened for sales such as Kien Hung resettlement area with over 1,008 apartments, new urban zone project in Sai Dong with 840 apartment and new urban zone project in Dang Xa with 946 apartments.

10. Vietnam’s biggest software park project withdrawn

Chairman of HCM City People’s Committee o November 7, 2011 issued a decision to revoke the investment license for Thu Thiem software part project and asked the investor to pay over $1 million. The project was licensed on June 11, 2008. This was considered Vietnam’s biggest software part project by that time with a total investment of $1.2 billion.

The project was invested by TA Associates Vietnam Ltd Co, a joint venture with 20% stake contributed by Saigon Telecommunications Technology Joint Stock Co (SaigonTel) and 80% stake constituted by Taiwan-based Teco Group.

(Source: Vietbiz24.)

Land, house taxes may be used for infrastructure

2012-01-01T16:46:00.000+07:00

Land is a national resource that can be used to fund infrastructure projects, at a time when public investment for such projects is declining.

Speaking at a conference about using real estate funds to support infrastructure development held in Hanoi yesterday, director of the Finance Ministry's Institute of Financial Strategy and Policy Vu Nhu Thang said infrastructure investment accounted for 9.2 per cent of GDP over the last five years, but funding for next year would be lowered to 180 trillion c (US$8.5 billion) or 6.5 per cent of GDP.

According to Thang, land taxes and fees have been a major source of income for the State and it was time for Vietnam to think about other ways to better take advantage of real estate.

Pham Sy Liem, director of the Institute for Urban Studies & Infrastructure Development, said Vietnam had yet to impose house and land taxes, which is an important feature of taxation in countries with high urban populations, and suggested having a different tax rates for different sized houses.

Such a tax would help maintain and build public infrastructure and public goods such as pavement, trees and street lights, Liem said.

"It's the public infrastructure that adds value to the surrounding land and property," he said, using property values along the national highway as an example.

He also said instating a fee for developing social infrastructure such as schools and hospitals would also help infrastructure development.

Among the top three state income earners last year, nearly 1.4 trillion dong ($66.6 million) was from land tax, about 50 trillion dong ($2.4 million) from land-use fees and 3 trillion dong ($142.6 million) from land lease fees.

Head of the ministry's Bureau of Public Property Management Pham Dinh Cuong said land-use fees, which accounted for 90 per cent of land-related income, were often fixed for long periods, so land lease fees were a more flexible option for the 500,000 enterprises renting land.

The Government could reclaim leased land easier if the land was under planning for projects without paying compensation or arranging resettlement.

He noted land clearance and compensation payments were a bottleneck for most infrastructure projects despite.

However, Cuong said that it would be difficult to raise land lease fees with the current pressures of inflation.

He also recommended mobilising money from beneficiaries of infrastructure projects to help fix infrastructure in need of repair, which could be handed to the Government.

Conference participants also discussed the establishment of "clean" land banking that provides data about areas available for the development of new projects where investors did not have to worry about land clearance or compensation, which would streamline the process.

(Source: Vietnam News.)

Property trading floors close their doors

2012-01-01T16:43:00.000+07:00

The real estate market has seen a number of property trading floors in the capital city close their doors, with economists attributing the chilled market to tight credit and monetary policies pursued by the State Bank of Viet Nam.

Tran Van Long, director of a real estate trading floor located in the My Dinh new urban area, said real estate traders had faced hard times this year, with the luxury apartment segment seeing a significant decline and land and housing transactions generally plunging significantly.

The competition between remaining real estate trading floors has became fierce. Many in the southern region have sought to elbow their way into the market in Hanoi. Others have reduced commission ratios for brokers.

According to the Ministry of Construction, the country is now home to around 700 real estate transaction floors.

Lan Anh, vice chairman of a Hanoi real estate club, said real estate developers' patience had run out, and many had backed out of their project contracts to increase their liquidity and changed sales agents to cut costs. This has had an impact on real estate trading floors, pressuring many to close or shift to other lines of business.

Nguyen Quang Tuan, a broker on the Chau A real estate trading floor, lamented the dismal state of the real estate market. Normally, he said, as the year ended, people liked to buy new homes to welcome in the new year but that market was all but gone. The worsening economy had a negative impact on every economic sector, including real estate, he said.

Le Quoc Hung, managing director of the Vinacity real estate trading floor, also said that land transaction usually became boisterous at the end of the year, but this year there were few who could afford the high price of real estate.

Hung also attributed the cooling real estate picture to dramatic fluctuations this year in gold prices, drawing investors to other investments besides real estate.

Real estate transactions came to a standstill in the third quarter of 2011, said the deputy director of Hanoi construction department Nguyen Quoc Tuan. There were 2,700 successful transactions during the quarter, compared to 9,000 in the same period a year earlier.

Dat Lanh Real Estate Co director Nguyen Van Duc predicted the real estate market would get even tougher next year due to further economic difficulties and housing products that were simply too overpriced.

He urged the Ministry of Construction to impose appropriate regulations requiring apartments of 30-50 square metres to be sold at reasonable prices of between 500 million dong (US$23,000 million) to 1 billion dong ($46,000), enabling more people to buy.

(Source: Vietnam News.)

HCM City land price frame almost unchanged in last 3 years

2011-12-31T05:30:00.000+07:00

HCM City People’s Committee has issued the land price frame in the city, which said that the highest urban land price is 81 million dong, the lowest at 110,000 dong per square meter.

The ceiling price frame has been unchanged from 2009.

In particular, the price of land for growing water paddy, annual plants and raising seafood is ruled at 58,000 dong to 162,000 dong per sqm. Land price for growing long term plants ranges between 68,000 and 190,000 dong per sqm. Price of forestry land for production is 43,000-72,000 dong per sqm. Price of defence forest land is equal to 80% of production forestry land price.

For urban and rural land, the lowest price is 110,000 dong per sqm in Thieng Lieng residence area, the highest is 81 million dong per sqm in the streets of Dong Khoi, Le Loi, Nguyen Hue, Dist 1.

The ceiling price frame has been almost unchanged since 2009. Land in alleys Grade 1 is applied with the price calculation coefficient of 0.2-0.5 times compared with street land price. Other kinds of land have prices of no more than 0.8 times against street land price.

The regulation on land price will be used to calculate land using rental, income tax from transferring land usage right, registration fee. It will also be applied on compensation for those who violate law on land. New land price frame of HCM City is the basis to calculate land using rental for households and individuals.

In case the State assigns and leases land according to method of auctioning land using right or tendering projects, the starting price of land using right must not be lower than land prices in this rule.

(Source: Vietbiz24.)

DIC Corp releases real estate projects for 2011-2012 period

2011-12-31T05:28:00.000+07:00

In the working session with SAM Investment Fund and Markus Winkler, representative of group of Swiss investors, Hoang Van Tang, project manager at DIC Corp has introduced some projects that the corporation has been carrying out with expectation of bringing in revenue for DIC in 2011-2012 period.

In details, as for Chi Linh urban area project, Vung Tau City, the company has finished the infrastructure facilities and put into operation one high-rise apartment blocks with 18 storeys and 268 apartments, two blocks of high-class apartments of 800 apartments (Seaview residential quarter) and four 17-storey apartment blocks in Lakesides residential quarter with 756 apartments.

The corporation has completed construction works on other social infrastructure facilities such as primary school, secondary school, kindergarten, market, lake, golf course, tennis court, supermarket and green parks.

For Dai Phuoc eco-tourism urban area project: the project was sited in an area of 464 hectares in Nhon Trach Dist, Dong Nai province. DIC Corp has finished 100 percent of compensation works for ground clearance purposes. At present, the company has made direct investment to conduct construction works in an area of 100 hectares. As for the rest area, DIC has set up joint venture with Vinacapital and some foreign investors.

The company expected to transfer the land plots for villas in the project in 2012.

Long Tan Tourism Complex was sited in an area of 328 hectares in two communes of Long Tan and Phu Thanh, Nhon Trach Dist, Dong Nai province. The corporation has finished compensation works for ground clearance for 40 hectares. At present, DIC Corp. has signed memorandum of understanding (MOU) with Dubai Pearl Holding for setting up cooperation relationship in realising the project.

South Vinh Yen new urban area project was sited in an area of 446.92 hectares in Vinh Phuc Province. In the first phase of the project, the investor would carry out construction works in an area of 194 hectares. In April, the corporation has signed the cooperation contract worth 756.3 billion dong for conducting this project.

For other ongoing projects such as An Son Hill Villa Complex in Ward 4, Da Lat City, Thuy Tien high-rise building in Vung Tau City, Phu My new urban area in Tan Thanh Dist, Ba Ria-Vung Tau province and Hiep Phuoc residential quarter in Nhon Trach Dist, Dong Nai province, DIC Corp expected to report revenue in 2012.

(Source: Vietbiz24.)

Hanoi to have nearly 8,500 apartments for low income earners

2011-12-31T05:27:00.000+07:00

Hanoi Department of Construction has recently said that currently, the capital city is carrying out investment and construction for 10 hostel projects for over 43,600 students and eight dormitory projects with nearly 8,500 apartments for low-income earners.

In addition, the city is also conducting social house construction and put into use for 500 apartments for lease and 300 apartments for lease and sales on a land area of 20 percent at Viet Hung new urban area, 352 apartments at Ngo Thi Nham residential project in Ha Dong district for low-income people.

864 flats have been put into use, serving about 10,000 workers in North Thang Long industrial zone, in Kim Chung Commune, Dong Anh district, Hanoi.

(Source: Vietbiz24.)

Southern Hub Property Market Still In Nightmare

2011-12-28T22:55:00.000+07:00

HCM City's sleepy apartment market sees no sign of improvements amid a difficult economy.

"Never before has the property market been as stagnant as it is this year. There were a number of homebuyers by late 2008-2009, a period which was hurt by economic turmoil but there was almost no transaction at this time of the year," said property firm TechcomReal's general director Nguyen Xuan Loc.

Loc added that while homebuyers were almost absent, scores of customers wanted to sell apartments under consignment at prices equal or even lower than original prices to recoup capital.

"It seems that there are no opportunities for apartment projects at this point of time.

The customers are reluctant even towards attractive sales promotion policies," said Hoang Anh Sai Gon Company's general director Doan Chi Thanh.

Tac Dat Tac Vang Company's general director Hoang Anh Tuan said the market problem was rooted in the big gap between the supply and demand.

"Amid squeezed credit lines, many real homebuyers could not or did not dare to take on loans with high lending rates. How can developers sell out products when there are no buyers?" said Tuan.

Tuan said it was unlikely the southern property market would see the light at the end of the tunnel next year.
Reality shows that though the land and housing price slid remarkably in the past months, the customers are waiting for further reductions.

"The customers have taken a wait-and-see approach while firms wanted to sell out products as soon as possible through rolling out diverse promotions and discounts.

This could worsen market situation," Tuan commented.

Later last week, real estate firm Anh Tuan Group offered land plots under Anh Tuan Garden land plot project in HCM City's Nha Be district at price of 6.5 million dong ($309) per square metre against VND8.2 million ($390) per square metre offered in the previous launch. However, the project did not grab much attention from customers.

Recently, Vietcomreal launched its Moon Garden apartment project in the city's District 4 at prices ranging from 24-26 million dong ($1,140-$1,240). The project, however, could not appeal to customers despite having a 'good location'.

According to Vietnam Housing Joint Stock Company chair Tran Van Thanh, a number of property firms were brought to court as they had violated contract terms signed with the customers. In anther case, some firms had to take on quick loans with high interest rates to pay up staff salaries and cover operation expenses.

"These disorders are just the start unless market rescue policies are introduced in a timely manner," said Thanh.

(Source: VIR.)

Developers upbeat on property prices and quality

2011-12-28T22:51:00.000+07:00

HCM City Real Estate Association (HoREA) on December 23 organized a seminar themed “Quality and Housing Price” in the HCM City to discuss prices along with quality of apartments and houses.

Chairman of HoREA, Le Hoang Chau spoke that real estate companies had to face monetary tightening policy and very high lending rates so in order to survive, they accepted to offload products at lower prices without concerning apartment quality. However, investors have only been able to cut down materials used for inner decoration, excluding safety targets namely work solidity, fire fighting, or elevator.

A qualified apartment building does not mean high price. If having a good architect team, investors can save designing cost, avoid wastage and lower prices by 2 million dongs per sqm, Nguyen Van Duc, Vice Director of Dat Lanh Real Estate Co was quoted as saying. If execution phase is conducted suitably with tight management, the price may be lower.

According to Le Chi Hieu—Chairman of Thu Duc House JS Co, to choose a quality house matched with the demand, buyers need to focus on planning, designing, work investment and building management board.

At the seminar, company leaders had the common assessment that qualifying houses and properties was a challenge to realty companies. Image and prestige of developers are more significant than market difficulties and fiscal liquidity.

(Source: Vietbiz24.)

Reference real estate price in HCM City in third week of Dec 2011

2011-12-27T14:23:00.000+07:00

In the third week of December 2011, the bid price of ground land and apartment in HCM City saw contrary movements, especially projects in district 2 and Binh Chanh district.

In district 2, generally, the bid price for projects in wards virtually decreased from 100,000-200,000 dong/m2.

In An Phu-An Khanh new urban zone, in district 2, An Hoa project was offered at the price of 19.1-21 million dong/m2, down 0.5% from the previous week. The offering price of An Thinh project also decreased 100,000 dong/m2, equaling 24.5-26.5 million dong/m2.

The bid price for Cantavil project also fell by 200,000 dong/m2 to offer at 31.2-36.9 million dong/m2. The Estella project also saw a fall of 0.3% or 100,000 dong/m2.

In the Binh Trung Dong ward, only Thu Thiem Stars project saw declines in 0.5% from the previous week to offer at 19.2-23 million dong/m2.

In Thach My Loi ward, amongst 16 projects, six saw declines in price. Typically, accommodation project for workers and officers in district 2 saw a fall of 0.8% to offer at 24.6-28.3 million dong/m2.

In Binh An ward, two projects saw declines in price namely Tan Hong Uy down 100,000 dong/m2 and Thu Duc House project down 200,000 dong/m2.

The price of an apartment and ground land in the remaining wards in district 2 remained unchanged from the previous week.

Conversely, in Binh Chanh district saw the upward tendency by 200,000-500,000 dong/m2.

In the group of 6A-Trung Son residential area project, two projects saw an increase in price namely Him Lam-South Saigon (up 0.1%) and Hong Linh Plaza (up 300,000 dong/m2).

In the group of zone 13 projects, of the total 20 projects, seven saw an increase in price. The highest rise was 500,000 dong/m2 for ground land at 13B project to offer at 19-21 million dong/m2.

Apartments in A View project also increased 200,000 dong/m2 to offer at 12-14 million dong/m2.

In remaining districts, the offering price for ground land and apartments remained unchanged from the previous week.

(Source: Vietbiz24.)

Work starts on new property projects despite dreary market

2011-12-27T14:21:00.000+07:00

The local property market is still plagued by extremely low consumer demand, but some developers have begun work on their projects in certain areas in District 9, HCM City.

Thang Long Real, a property developer, has kicked off a sale of Nature Land, a part of Dong Tang Long urban area in the district’s Truong Thanh Ward, which will cover 160 hectares and cost US$94 million.

There are 119 lots of land available for sale at 9.9 million dong per square meter. The period of payment is one year and a half. The company has recently organized a meeting with 500 potential buyers and 17 of them have put their names down to purchase lots.

In another project, HVK, a joint venture between construction firm Hung Viet and Korea Real Estate Development Fund (KRDF03), has commenced work on The Eastern on Lien Phuong Street, District 9.

The venture will invest about US$40 million in the project with 648 apartments of 56 to 112 square meters each. The project is projected to be ready in end-2013.

Adjacent to The Eastern, there is a Villa Park project just completed by Khu Dong, a unit of Khang Dien Company, and 60 units there have been handed over to customers. The 11-hectare luxury Villa Park in Phu Huu Ward has a total of 213 semi-attached and terraced units.

A second handover is expected to take place in June next year.

According to property market research firm Savills Vietnam, HCM City’s eastern area including districts 2 and 9 is a key source of land lot supply with prices ranging from US$140,000 to US$2.38 million per villa and from US$96,000 to US$890,000 per terraced house.

More than 1,700 villas and terraced houses are forecast to enter the HCM City market next year and another 2,000 in the two following years in districts 2, 9, 7 and Nha Be.

(Source: Saigon Times.)

Hanoi struggling to rescue the real estate market

2011-12-27T09:31:00.000+07:00

Similar to the general situation of Vietnam real estate market, Hanoi realty sector has seen small transactions during this year, which requires an early corporate restructuring in this field to boost product quality, cope with capital shortage and boost sales.

The requirement is attached with tighter management moves of authorities to avoid speculation and offloading.

According to Vice Director of Hanoi Construction Department Nguyen Quoc Tuan, the real estate market is going with unstable transparency, high housing prices, complex moves, widespread speculation and declining transactions.

“Transactions through or not via the real estate trading floor also plunged in 2011 in terms of volume and value, especially in the third quarter of 2011”, he concerned.

In the first half of this year, 2,700 property transactions were successful in Hanoi, but the figure in Q3 was only 900. The market mainly centralized in urban areas but volume, trading price and big changes were often seen in the west, and southwest of Hanoi.

In the coming time, Hanoi construction department will propose the coordination of relevant departments of architecture planning, planning and investment to examine, supervise and offer housing restructuring adjustment in the housing development project to meet the public demand, save land resource and ensure synchronic infrastructure of new urban.

Hanoi will limit the development of high-class property (villas, apartments with an area of over 120 sqm) in new commercial housing projects, and stop the projects which are unable to connect infrastructure and provide urban services.

Mr Tuan recommended banks to cut lending ratio for construction of new urban areas, office for lease, trade centres, markets, shops, housing for sales, buying land using right or compensating for ground clearance. In addition, banks should increase credit provision for building urban infrastructure, purchasing houses, completing housing projects towards the capital withdrawal in 2012.

In a recent meeting with Hanoian property developers, Minister of Construction Trinh Dinh Dung remarked that realty firms need to be restructured.

Dr Le Chi Hieu—Vice Chairman of HCM City Real Estate Association shared the same point of view. First of all, enterprises have to reduce selling prices, transfer or call for investment cooperation to deal with temporary capital shortage, cut down workforce and reliance on bank credit, offer products or attract capital source of foreign investors.

Enterprises should focus more on strategic investments in fields of mid-class housing and real estate for low-income earners, outskirt projects of big cities as the land prices remain cheap.

(Source: Vietbiz24.)

Year- End Real Estate Market: Pressure for Big Rebates

2011-12-24T19:25:00.000+07:00

Vietnam real estate market has stepped into the final days in 2011. People’s lack of knowledge about the market has made it gloomier than ever.

Popular apartments to burst

While the medium and high quality department segments mostly stand still in the Vietnam real estate market even as investors have carried out promotion and discount programmes, the average quality apartment segment has attracted lots of interest. In mid November, according to the Northern Dat Xanh Services and Land Joint-stock Company, 75 of the total 90 flats of Dream Town Department (Tay Mo commune, Tu Liem district) with the price of VND17.8 million per sq.m have been sold in the first sale offering. Earlier, this secondary company was also successful in understanding the real demand of people, applying acceptable prices for Tan Viet project (Duc Thuong commune, Hoai Duc district), or Nam Do Complex project (in Truong Dinh street). With the price of around VND 15 million per sq.m, after a month, two major dealers have mostly sold out 150 flats of Tan Viet department, which was carried out by project owners.

In fact, customer demand currently concentrates strongly on segment of popular quality department with the price of around VND 14 - 22 million per sq.m. This definition becomes clearer when real estate market goes into turmoil. However, in order to have purchased products at this moment, project owners must have prepared for at least three years. However back then, medium and high quality apartments were so attractive to customers that few investors thought about it.

In another case, in early November, the information of PetroVietnam Power Land Joint-stock Company (PVL), a secondary company offering flats of Petro Landmark project (District 2, Ho Chi Minh City) with the price of around VND 15.5 million per sq.m pulled in a lot of customers. Regarding PVL representatives, there are hundreds of calls from customers to get information every day. Nevertheless, even though the set prices were considered to be attractive, the selling methods of PVL were not good enough, so the result did not reach expectation.

In the second half of November, the real estate market saw several apartment projects open, like: Golden Palace (urban district Ha Dong), and Green Villas (Hoa Lac). In December, Cleve Van Phu project also started sales when it had finished foundation work.

Furthermore, in Da Nang province, 90 villas and houses of the Empire project did not miss this opportunity to open sales in Hanoi after a period of exploration. The prices range from VND 5.2 billion to VND 6.8 billion, project owners the Thanh Do Group estimated that these prices are very competitive compared to other projects in the same area of Truong Sa line and Ngu Hanh Son district.

Difficulties from many sizes

As information on the real estate market becomes easier to access, it becomes also easier to assess project owners’ strategies. According to real estate experts, project owners who sell at an indifferent level or do not sell at all are those who have financial potential and save their products for further opportunities. Meanwhile, units selling forcibly now, either have prepared with different strategies, or are suffering financial pressure and are forced to sell their products.

The financial shortage and unstable macro-economic situation have obviously influenced people’s thinking. However, from the viewpoint of selling, businessmen also have their objective reason. Around the Tet holiday people’s money source is quite sufficient due to incomes gathered in a whole working year. Therefore, more people are ready to settle down, move, renovate their house or invest in a first property.

In another hand, capital inflows from people living overseas and their interest into the real estate market cannot be ignored. Besides sending money to support their family, their capital inflows run directly into the real estate market.

Mr Nguyen Minh Tuan, Deputy Director of Marketing Consulting Company CBRE, assessed that easing macro-economic indicators such as reduced inflation rate and banks loosening property loan policies are a good premise; in addition, the abundant money savings of people will also liven up the market at the end of year.

“We receive many questions about when is the best time to buy, which means people have demand and their financial potential is high. The fourth quarter is always the most active in the real estate market. Enterprises mostly manage to estimate their profits and employees take stock of their incomes and rewards. Project owners who offer reasonable prices and good proper designs will absolutely attract buyers. Regardless of consumers’ behaviour, project owners who are selling at this moment have surely had long term options. When suppliers try so many ways to approach consumers, there will be various options to fulfil all types of demand,” Mr Tuan added.

(Source: VCCI News.)

52% of inward remittance poured into property market

2011-12-23T15:03:00.000+07:00

This year’s remittance to Vietnam is estimated to have reached $9 billion; up nearly $1.5 billion compared with 2010, according to data of the National Finance Supervision Committee, up to 52% of the remittances has been poured into the real estate market.

Turnover of Vietinbank’s money transfer and remittance trading office in 2011 is expected at over $1.3 billion, the highest figure of the bank so far. A representative of Vietinbank said, the estimated remittance inflow of $9 billion was the impressive figure and most of the amount was invested in property.

Such a high remittance came from Vietnamese overseas (Viet kieu) that sent money to support their relatives, a large part was investment in realty. Business and working operations of Viet kieu faced a lot of difficulties so they tended to transfer money to the homeland for investment, Mr Ngo Xuan Hai, Head of the office explained.

Archi Investment Joint Stock Co, investor of Nine Ivory Project revealed that despite being opened in the gloomy phase of the real estate market like present, they still gained a considerable number of customers who had inward remittances by the year end. Actually resort property allows long term investment and high profitability, matched with the investment demand of Vietnamese living in foreign countries.

The overseas remittance contributed well to the liquidity of real estate market, especially the resort property segment, said Nguyen Thanh Trung—Director of Nine Ivory Resort Project.

Latest data of the National Finance Supervision Committee showed that up to 52% of total inward remittance of $9 billion was poured into realty. Apparently, such an amount of nearly $5 billion was compared as oxygen to rescue the ailing property market at this time. This proved that Viet kieu saw investment opportunities as many projects were reducing in terms of attractive prices.

$9 billion accounted for almost one tenth of Vietnam’s GDP, which was the effective support for the economy and the capital shortage of realty market.

(Source: Vietbiz24.)

Government approves strategy on housing for the poor

2011-12-23T06:15:00.001+07:00

The Vietnamese prime minister has approved a national housing development strategy up to 2020 with a vision to 2030, with a specific aim to construct 10 million square meters of housing for low-income earners in the next four years.

Apartment buildings should be the most popular type of housing projects, accounting for over 80 percent of the total new housing units to be developed in Hanoi and HCM City, while the percentage would be 50 percent in first and second-grade cities and 30 percent in third-grade cities.

The housing strategy also sets a goal to build 12.5 million square meters of social housing in the 2016-2020 period, raising the minimum housing area to 25 square meters per capita nationwide, and 29 square meters in urban areas. It is expected that the national figure would surge to 30 square meters per capita by 2030.

To achieve such a goal, the government has established the Central Steering Committee for Housing Policy and Real Estate Market involving six ministries including the Ministry of Construction, the Ministry of Planning and Investment, the Ministry of Finance, and the Ministry of Labour, War Invalids and Social Affairs.

In addition, the investment procedures would be simplified to encourage investors to join apartment projects under the form of build-transfer (BT) and public-private partnerships (PPP).

Along with the land fund and tax policy, the national housing development strategy would pool capital from the State budget, government bonds, official development assistance (ODA) and other sources to achieve its target.

(Source: Saigon Times.)

Vietnam to see further decline in home prices: report

2011-12-23T06:14:00.000+07:00

The housing markets in both Hanoi and Ho Chi Minh City will continue to see price falls in 2012 as cities across Asia-Pacific are expected to have weaker sales volumes, according to global property consultant Knight Frank.

Residential prices in the two Vietnamese cities will fall by 5 to 10 percent next year, after an estimated drop of 10-20 percent in 2011, the company said in a new global forecast.

The other five Asia-Pacific cities that are expected to see negative price growth in 2012 are Hong Kong, Mumbai, Singapore, Shanghai and Sydney, according to the report, which tracks price performances of 21 so-called “prime markets” around the world.

“In most cases these price falls have been partly driven by government regulation, which was brought in after 2008 in an attempt to cool housing markets before they experienced US and European style crashes,” Knight Frank said.

The company noted that while the prime cities may be outperforming other mainstream markets, they are “in no way immune from weakening confidence and deteriorating market conditions.”

“Cities across Asia-Pacific are at the sharp end of this process, with weaker sales volumes in many cities starting to feed through into price growth,” the report said.

Liam Bailey, head of Residential Research at Knight Frank, said after two years of growth the world’s prime markets look set to cool in 2012.

“Before 2007 the global housing market was a much simpler subject to analyze. Prices and demand rose year-on-year pretty much everywhere and at almost every level of the market. Then came the credit crunch, and things became more complex,” he said.

According to the report, price falls are expected in 44 percent of cities in 2012, no change in 12 percent and rising prices in the remaining 44 percent.

(Source: Thanh Nien News.)

Foreign investors upbeat on Vietnam real estate market

2011-12-23T06:13:00.000+07:00

Many foreign investors are very cautious in making investment decisions in Vietnam real estate market because of unstable economic potential as well as increasing inflation and interest rates.

Meanwhile, the liquidity is being limited by the state’s credit tightening policies. But they [foreign investors] remain optimistic and believing in the bright future of Vietnam property market.

Compared with previous 4-5 years, FDI flow to the realty market has declined sharply. Particularly, in 2008 alone, the pledged FDI to the field topped at over $23 billion, Phan Huu Thang, former Head of Foreign Investment Department under Ministry of Planning and Investment told Dau Tu Chung Khoan newspaper.

In 2009, the real estate trading slumped clearly but still attracted $7.4 billion of newly registered capital. Even under the impacts of the global economic crisis in 2010, foreigners committed to invest $6.84 billion in the market, becoming the industry attracting the most FDI capital last year. But since 2011 early, the situation has totally changed.

Latest data of the Foreign Investment Department showed that in the first 11 months of this year, the country attracted 919 newly registered FDI projects and 324 projects increased in capital size. In which, the new and increased capital in this field reached only $464.13 million, ranking the fourth among the FDI receiving sectors in Vietnam after processing and manufacturing sector, electricity production and distribution, and construction.

According to Vietnam Department for Competition Management (Ministry of Industry and Trade), from the beginning of 2011, there have been 73 announced M&A deals including 22 in the property market (mainly project transfer deals worth around $250 million made by foreign investors).

Yet, Mr Do Nhat Hoang from the Department said that we should not have less optimistic look at FDI flow to Vietnam in 2011.

“A positive sign for FDI flow is sharp reduction in number of real estate and service projects. Instead of this, the projects in industry and manufacturing ranked top and showed the stable development of the economy”, he emphasized.

MPI is inspecting and examining real estate related FDI projects through which ineffective projects will be revoked.

Association of Foreign Investors in Real Estate (AFIRE) lately assessed, Vietnam ranked the fourth among emerging markets in the region in terms of foreigner attraction. Also, Vietnam was selected as the leading investment destination of Singaporean investors in South East Asia.

With above bright points, Vice Minister of Construction Nguyen Tran Nam expected in the future, the realty market will continue the good development because urban population growth is the important factor to confirm real estate development demand in Vietnam. The urban population increased from 25.4 million (29.6% of total population) in 2009, and estimated at 43.2 million (45%) by 2020. Based on this, the demand for housing is forecasted at 905 million square meters by 2015 and 1.026 billion sqm by 2020.

Experts said that financial pressure on local housing development projects led to bad debts in Vietnam but created new period and many opportunities for foreign investors.

Khaw Aik Heng, Director of Apave Project in Vietnam and South East Asia said that foreign investors should not have worrisome on safety of their investment in Vietnam real estate market. He believed the growth of condominium segment would be very strong in the near future.

(Source: Vietbiz24.)

Vulture funds circle Vietnam’s property market

2011-12-19T16:24:00.001+07:00

Vietnam’s once-frenzied property market has ground to a halt, leaving local developers limping and international investors salivating at the chance of snapping up distressed deals.

With poorly-capitalized local developers struggling to complete projects, foreign funds say this is the opportunity they have been awaiting since the global financial crisis began.

“In the last 30 days, we’ve signed up two deals that I would put in the needy category,” Peter Ryder, the CEO of Indochina Capital Corp, said in an interview at the end of November.

Property sales in Ho Chi Minh City have fallen by half this year while interest rates, which are hovering around 20 percent, have pushed buyers who need to borrow to the sidelines.

Only 5,470 properties changed hands in Ho Chi Minh in the first nine months of this year, according to brokerage CB Richard Ellis, down from 10,213 in the same period in 2010.

This has prompted Vietnam property investors, after years of waiting for the right time to buy, to say now is the time.

“It will be a better buying time than any time over the last four years,” said David Blackhall, deputy managing director at Vietnam fund manager and property developer VinaCapital. “The market is going through a pretty challenging time.”

The catalyst for the slowdown in home sales is rampant inflation, at 19.8 percent in November. Though interest rates look set to moderate next year, the damage has already been done to the property industry.

“The next 12 months will be difficult in real estate,” Blackhall said. “The liquidity has basically gone out of the market, so it has really slowed everything down.”

Blackhall says land prices have fallen 12 percent over the last 12 months, while condominium prices in Ho Chi Minh and Hanoi have fallen 10-15 percent over the last year. He expects a similar decline again next year for apartments in those cities.

A broken model

Vietnamese developers have typically pumped money into land and the foundations of projects and funded construction through sales and, as a last resort, bank borrowings.

That model is falling apart now that sales have dropped off.

“If they’re half built, they can’t leave it half built, so they have to carry on,” Dominic Scriven, CEO of Vietnam fund manager Dragon Capital, said. “The key is where their existing financing has come from and what pressure they’re under to repay that.”

Scriven is starting to see “pockets of distress” in the property industry as a result. His company has a property team of six, which is now in talks with several developers.

“They were looking for distress in 2008, but there was very little,” Scriven said, and that evaporated when a stimulus package was swiftly introduced. “This time around, we are getting calls that lead to sensible conversations.”

The company, which is raising a new fund to invest in Vietnam, Laos and Cambodia, also has a property fund with US$90 million in assets. Around 40 percent of that is currently in cash, which it hopes to invest in three or four deals, Scriven said.

The two deals Ryder struck at Indochina include Ho Chi Minh residential developments where the developer ran into financing problems. Indochina, which declined to identify the properties, will now look to reposition, redesign and sell them under the Indochina name.

The lender approached Indochina on the first deal, a $40 million development that it bought outright. “The bank had a gun to the head of the local developer,” Ryder said adding that financiers continue to approach his company. “I would be very surprised if we don’t do several more deals.”

Hard to exit

The flip side is that international investors with property to sell are finding it hard to shift.

CapitaLand, Southeast Asia’s largest developer, is building 5,900 homes in Ho Chi Minh and Hanoi and is using the slowdown to target local developers and landowners.

“The current economic difficulties…present opportunities for us to explore good investment opportunities,” the company said by email.

It has done two deals this year in lower-cost housing, buying majority stakes in joint-venture projects with Khang Dien House Trading and Investment and with Quoc Cuong Gia Lai.

Keppel Land has 8 percent of its assets in Vietnam, with 22,000 homes in the works. It says it is taking a long-term view and is confident the market will recover.

Indochina, in which Japanese finance house Orix Corp owns a 25 percent stake, is currently working on sales at two projects. It has sold 90 percent of the apartments at the Hyatt Regency Danang. “We’ve covered our nut there, so there’s absolutely no pressure there,” Ryder said.

But the Indochina Plaza Hanoi is only 70 percent sold and the company is offering incentives such as a free parking space to tempt buyers. “We’ve definitely had to sweeten the pie, but not in a dramatic fashion,” Ryder said. “We continue to sell two, three apartments per week.”

VinaCapital has a large land bank in its VinaLand fund, which has a seven-year life that runs through 2013. But the land will take another four years to monetize, Blackhall said, so the company plans to ask investors to extend the life of the fund, giving it time to prepare the land for development or sell it when the market improves.

“You don’t want to be selling everything off today because the market is not suited today,” Blackhall said.

(Source: Reuters.)

Real estate market to remain gloomy till mid-2012: Minister

2011-12-19T16:20:00.000+07:00

Minister of Construction, Trinh Dinh Dung, has said at the conference of construction enterprises that the difficulties of the real estate market will continue to last at least till the end of the second quarter next year.

Accordingly, the frozen real estate market reflected the truth about the real estate market in Vietnam, but this has caused difficulties for the economy, generating more social problems.

According to the minister, the government did not set high growth target in 2012 due to continuing the implementation of measures to tame inflation, stabilise macro-economy and ensure social security. So, the market will continue to face troubles, at least in the first six months in 2012.

The minister also said that in the present context, the real estate market should focus on the segments and projects in great demand and good performance and the unfinished projects with high liquidity capacity also need concerns of capital.

(Source: Vietbiz24.)

Hanoi real estate market eyes condominiums priced at 15m dong/sqm

2011-12-19T16:18:00.000+07:00

Facing the pressure of decreasing prices, Hanoi real estate market began to see a number of new condominium projects with price of about 15 million dong per square metre.

Many new projects are offering at the price of 14-20 million dong/sqm.

Eying customers who purchase house for living with amount of money of about over one billion dong per apartment, many investors have recently launched to the market affordable products to meet this demand and compete against previously built condominium projects.

In a few years recently, house prices in general and condominium price in particular in Hanoi have always been at high prices. And it was very difficult to find the condominium projects at the price of below 20 million dong per sqm (except housing projects for low income earners).

Condominium prices in 2011 fell significantly from 2010 by 10-30% depending on market segments, especially the premium segment. Recently, the apartment price ranging around 14-15 million dong/sqm has appeared on the market, leading increasing demand in this segment.

The first project was Tan Viet Tower apartment area located on the National Highway 32 (opposite to the Tan Tay Do urban zone), Hoai Duc, Hanoi. This apartment project was offered at the price of 14 million dong/sqm.

Not long ago, CEN Group Real Estate Trading Floor also has worked with investor namely An Binh General Services and Trading Joint Stock Co to introduce a capital contribution product of An Binh Tower apartment project in Co Nhue, Ha Noi (near University of Mining and Geology) at the price of 15.1 million dong/sqm.

Dat Xanh Mien Bac Real Estate JSC that has recently offered Dream Tower project in Xuan Phuong, Hoai Duc invested by Coma16 at the price of 17.8 million dong/sqm has also recorded success with 75 transactions for the first offering.

According to representative of Dat Xanh firm, in the near future, the company will distribute apartment projects with affordable prices for end-use demands. The following project will be CT2A building in Tan Tay Do urban zone, Hoai Duc, Hanoi invested by Hai Phat Investment Joint Stock Co at the price of from 15.3 million dong/sqm. This project has finished construction for the sixth floor so far.

Together with some commercial condominium projects at the price of less than 20 million dong/sqm being put up for sales recently, some other apartment projects for low-income earners in Hanoi have been also introduced at the price of 11-12 million dong/sqm. Most recently, Vietnam Association of Financial Investors (Vafi) has also proposed to reduce the price level for these apartments by 40% compared to the current prices to meet the demand of low-income people.

Previously completely-built projects also en masse gave discounts.

Under competitive pressure from new projects with much lower prices by 5-7 million dong/sqm than the market together with difficulties in selling products of the real estate market, on the secondary market, prices of newly-built apartment projects or that are under construction in Hanoi’s Ha Dong district area also decreasing significantly.

Prices of Van Khe apartment projects are about 21-23 million dong/sqm, down by three million dong/sqm from previously.

A project on the Linh Nam Street (Hoang Mai - Hanoi) has recently shocked the market when lowering the price to just over 12 million dong/sqm. Sails Tower condominium project was offered at a price less than 18 million dong/sqm with flat area ranging between 77.2-107.8 square meters.

Other information that has also recently attracted the attention of the apartment market is that Lai Chau Construction No. 1 firm subdivided the area of two-storey penthouses of CT5 Xa La new urban zone building into 32 new small apartments ranging between 36-60m2, and has offered to the market at 11.5 million dong/sqm or about 500 to 600 million dong per apartment. However, speculators immediately manipulated these apartments pushed up the trading prices to 14-15 million dong/sqm. Previously, the price of Xa La apartments was offered at 18-20.5 million dong/sqm.

A few other middle apartment projects in Ha Dong district are also discounting prices compared to the market price in previous months such as Victoria Van Phu project invested by Van Phu Invest Co.

According to the sales announcement of Van Phu Invest, this apartment project prices will be offered at 19.5 million dong/sqm including VAT (value added tax) and 2% maintenance fees. This price is recorded as lower than before by 2-3 million m2.

Declining price tendency for apartments or selling the apartment project at the price of less than 20 million dong/sqm is forecasted to continue to boom in 2012, when the real estate market still remains difficult. This is also a good time for house buyers to have more choices and more appropriate price.

(Source: Vietbiz24.)

Serviced apartments still hold potential: expert

2011-12-17T09:42:00.000+07:00

Vietnam’s serviced apartment segment still holds great potential, even when compared to other housing segments, a recent conference on the subject heard.

In the face of the entire real estate industry’s recession due to macroeconomic difficulties, the segment is facing many challenges, said Marc Townsend, managing director of CBRE Vietnam at the "Vietnam Serviced Apartment Investment Conference 2011”.

“They include falling rents and fewer tenants due to the worsening economic situation, as well as stiff competition from individuals buying apartments for sublease,” he said.

However, the serviced apartment segment has a great chance to grow as the inflow of foreign direct investment (FDI) returns as the local economy recovers, the rapid urbanization process in major cities continues, the growth of Vietnamese manufacturing industries holds steady, and the number of international travelers to Vietnam continues to rise.

There are many other factors that could boost the future development of the segment, including the growth of investors’ appetite for operating assets and the lack of existing products.

There are only 3,595 existing serviced apartment units in Ho Chi Minh City, while the number of work permits for foreigners in the city last year jumped to 6,700, excluding ‘grey’ expats, or those working without permits, Townsend added.

According to CBRE, HCMC still leads the country in the number of serviced apartments available with 3,595 units, followed by Hanoi with 2,300 units, and Da Nang with only 146 units.

CBRE believes that the number of serviced apartments on offer is too low to meet the needs of the foreigners and the nearly 81,000 overseas Vietnamese who work in Vietnam.

In the future, the number of foreigners working in Vietnam will rise, leading to increased demand for serviced apartments, but the existing supply is too limited for this expected upturn in demand, as are the plans to develop this potential market.

Ben Thanh Luxury project, one of only two projects in the center of HCMC where apartment buyers will be granted permanent ownership, will be invested and transferred into high-end hotels for lease, a form of investment in serviced apartments, said Nguyen Cao Tri, Chairman of Ben Thanh Real Estate Investment Joint Stock Co.

The capital recovery period is six years if investment is shifted into serviced apartments, a temporary solution while the real estate market is frozen, he added.

(Source: TTO.)

Certification a must for apartment building management

2011-12-17T02:08:00.000+07:00

Starting from January 9 next year, apartment building managers must undergo training to achieve certifications issued by the Ministry of Construction, according to Circular 14/2011/TT-BXD recently released by the ministry.

Accordingly, those obliged to participate in the training programme include boards of directors from apartment management enterprises, heads of the divisions of technology, security, fire prevention and fighting, and environmental hygiene.

At least 12 months after the circular become effective, the afore-mentioned entities must achieve certifications of completing the training programme. Violations of the regulation will be penalised and prosecuted under the prevalent laws.

(Source: Saigon Times.)

International real estate organization eye Vietnam

2011-12-17T02:06:00.000+07:00

Asian Real Estate Association of America (AREAA) recently paid a visit to Vietnam’s real estate market, which was the significant event and good news for domestic property investors as well as the local market, VnMedia reported

Also the association signed a memorandum of understanding (MoU) on development cooperation and support with Vietnam Real Estate Association.

Mr David Tran from AREAA said that the presence of the association was a positive signal for Vietnamese and Asian American investors.

However, according to experts, the success of seeking new capital for Vietnam real estate market from Asian American investors relies on a lot of factors such as policies, investment environment and conditions. First of all, local investors should learn and combine training and experience lessons from the foreign investors in fields of business administration and specification improvement. This will help domestic investors avoid persuading hot growth of the property market with ignoring enterprise safety indicator.

Vietnam’s real estate market has been at the beginning so its processional and transparency level is not high.

AREAA provided useful information on the property market, housing and investment opportunity in US. Now the foreign capital flow to US property market has increased to $70 billion in 2010 and estimated at $90 billion this year.

(Source: Vietbiz24.)

Three big property projects introduced in HCM City

2011-12-17T02:04:00.003+07:00

Kent Lui, Chairman cum CEO of Kent Lui Tactics Co has introduced three big property projects with unique design in HCM City.

They are Times Square complex invested by Times Square Investment JSC; Royal Garden trade centre project in Dist 7 (of Tan Thuan Nam Co), and Saigon Peninsula of Paragon Group in Area A, Phu My Hung new urban area.

The projects are in the pipeline and funded by the united bank of Ficombank, TinNghiaBank and SCB.

(Source: Vietbiz24.)

Reference price of real estate projects in HCM City remain unchanged in second week of Dec

2011-12-15T13:09:00.000+07:00

Overall in week, the apartment and land market in HCM City remained unchanged. In District 2, the price increases for a number of projects located in Binh Trung Dong Ward, Thanh My Loi, Thao Dien and Binh An. The price of projects in the remaining wards also remained unchanged from the previous week.

Specifically, in Thanh My Loi Ward, price of apartment project for officers and staff in District 2 was offering at 24.4-28.3 million dong/sqm, up 0.4% from the previous week. Saigon industry project rose 0.3% from the previous week, to offer price of 29.3-31.7 million dong/sqm.

Offering price for Villas Thu Thiem project increased 0.5%, respectively at a price of 34.7-40.9 million dong/sqm; Thao Dien River View project had the asking price of 29-31.2 million dong/sqm, up 900,000 dong from the previous week.

Saigon 5 project’s offering price in Binh An ward increased 0.2%, at 43.5-48.5 million dong/sqm.

(Source: Vietbiz24.)

HCM City real estate market remains gloomy

2011-12-15T13:08:00.000+07:00

HCM City real estate market has remained gloomy for three consecutive quarters, but some investors are still offering for sales some projects the fourth quarter with an expectation that the market will recover soon.

Till the end of the third quarter 2011, due to prolonged real estate credit policy and high interest rate together with psychological anxiety of investors and house purchasers in the real estate market, the number of projects has been less than expected.

However, while all real estate segments in Saigon have been engulfed in crisis, some investors dare to find joint venture partners and introduce products to survey wait for "the fall" of the market from the middle of the fourth quarter this year.

By early December, Viet Real Estate Commercial Joint Stock Co (Vietcomreal) announced to open for sales of Moon Garden apartment project in district 4 at the price of 24-26 million dong per square meter. The project with an estimated investment capital of 758 billion dong was invested by Southern Rubber Industry Joint Stock Co (Casumina) and developed and distributed by Vietcomreal.

By the middle of Q4 or in November, a series of apartment and townhouse projects and villa land in HCM City were massively introduced for sales. On November 11, CT Land Co (a member of CT Group) organized a mini real estate exposition entitled "Buying house to welcome Tet (Lunar New Year)" lasted until the 2012 Lunar New Year whereby many real estate firms such as Hoa Binh, Vietnam House, Van Phat Hung, Song Da Cuu Long, 584, Ben Thanh Duc Khai, Dat Lanh and Thuan Viet announced and opened for sales many apartment products priced at less than 1.5 billion dong per unit.

Joining the race to sell products, Khang Dien Housing Trading and Investment Joint Stock Co also offered Hoja Villa project in district 9, HCM City at the price of 3.7 billion dong per unit (including VAT-value added tax). On November 24, Phuc Loc Tho Ltd Co also launched its apartment project named Phuc Loc Tho in Linh Trung ward, HCM City's Thu Duc district.

Currently, in HCM City real estate market, only Gold House project (Nha Be district) is offering a discount of 20% and has sold over 470 of the total 500 apartments in November. The rest of the market is changing insignificantly.

Although launching commodities amidst hard time, the common point of these enterprises is to choose the fall of real estate market in 2013 and accept to study and explore the market in 2012.

Vietcomreal's general director, Nguyen Thi Phuoc, said her firm is preparing six projects in urban districts of HCM city and waiting for the market's recovery to open for sales. "By the end 2011, I decided to sell apartments with convenient location, small and medium area in district 4 namely Moon Garden to explore the tastes of customers." her said.

Mrs Phuoc said Vietcomreal have been formed for five years and preparing legal documents for many projects but during the past period, her firm has not launched products yet as the macroeconomic situation and the real estate market remain difficult. "The reason why the company introduced commodities in the months of Tet holiday is due to we believe in the medium term, the market will show signs of recovery," Phuoc said.

General Director of Hung Viet Construction Investment Joint Stock Co and Korea Real Estate Development Fund (KRDF03), Oh Shanghun stated that real estate sector is not out of the crisis. Since 2009, HCM City real estate market has stagnated due to lack of cash liquidity in the market. But Mr. Oh Shanghun expected that the devaluation pressure of Vietnamese dong will be gradually reduced and loosening credit policy would be effective from the third quarter of 2012. "We believe that the market will recover in 2013," Oh Shanghun said.

(Source: Vietbiz24.)

Vietnam market shocked due to rapid downgrade of high-class apartment buildings

2011-12-15T13:05:00.000+07:00

A lot of Hanoian people accepted to spend tens of billions of dong buying high-class apartments with expectation to enjoy a modern and comfortable life, but now they have to live in downgrading condo buildings, the local newswire VnMedia reported.

Sorrow of high-class apartment buyers

Some years ago, The Manor apartment building in My Dinh, Hanoi was one of the most modern condo in the capital city thanks to beautiful landscape and service areas like swimming pool, entertainment area, supermarket, restaurants in suitable projection. To own such a modern and comfortable apartment was the dream of many families.

But after five years of use, the condominium area started to be downgrading along with many disputes between residents and investors due to the investor’s ignorance in maintaining and repairing works and public items. So, the class of the condo area is losing.

The similar situation can be seen in the highest building Keangnam Vina. A local person in the area said that most investors of condominium projects in Vietnam ignored and left to management boards. So the downgrade is evitable quickly. If there is no regular maintenance and caring for public works namely roads, trees, lighting system, playing ground, gym centres…Keangnam Vina’s value will also be downgraded in next few years. And the sufferers are residents here.

Spending one dong rather than losing 20 dong

Majority of Vietnamese people living in condominium buildings are not interested in operation and maintenance of the building because they thought that was the responsibility of investors and management boards. Even when the building is downgraded or public works are broken, investors find it hard to call for contribution from local residents.

Experts warned, if spending one dong for timely maintenance, investors will avoid losing 20 dong from which maintaining the building and works is very important, requiring the close cooperation and agreement of many sides including investors, management boards and residents in terms of suitable and acceptable costs.

(Source: Vietbiz24.)

Competition on mid-class condo prices likely in near future

2011-12-14T23:34:00.000+07:00

A lot of investors are reportedly shifting to build mid-cost condominium projects at 14-18 million dong per square meter while other projects are being offered at lower 1-2 million dong/sqm. People said that the market segment will see a fierce competition as the supply increases, according to the local newswire VnMedia.

Supply saturation

The high-class condo projects are unmarketable. The shifting of investors to mid-class property projects has caused a new wave in the last 2 months with the consecutive sale offering of over 10 cheap projects.

Typically, Dream Town project (Tay Mo, Tu Liem Dist, Hanoi) was offered at 17.8 million dong per square meter, VAT exclusive. An Binh Tower of Hanoi Agricultural Investment and Development One Member Ltd Co was launched to the market at 1.3 billion dong per apartment.

A project in Linh Nam St, Hoang Mai Dist, Hanoi caused a shock as being sold off to over 12 million dong/sqm while Sails Tower is priced at below 18 million dong/sqm for the apartment area of 77.2-107.8 sqm.

However, the purchase power for the kind of condos remains low because these condo projects are far from centre regions. In addition, most new projects are under the phase of foundation construction so it is hard to attract customers in the current context due to the idleness of implementation.

Furthermore, the soft condo market segment is facing the fierce competition of low-cost housing projects.

The fact showed that the low-cost housing projects failed as the stock increased to thousands of apartments because of high offering price of 11-13 million dong/sqm, for instance, Sai Dong low-cost housing project of Construction Co No 3 had only 30 people registering to buy in the second offering phase while only 15 people registered to take houses in Dang Xa project of Viglacera Co. Most of mini condo in Hanoi was offered at 600 million dong to 1.2 billion dong per unit.

Competition pressure

The booming supply of mid-priced condominium projects is expected to born a fierce competition in the segment.

Peter Ryder, CEO of Indochina Capital said that the oversupply happened in all property market segments. There are many factors affecting to the market, namely inflation, interest rates and credit capacity of individuals and institutions. The main point of the competitiveness is the features of projects and products.

However, Nguyen Trong Ky-Deputy General Director of Techcovina property firm was optimistic as saying that real estate companies are expecting a lower offering price suitable to consumers’ acceptance.

(Source: Vietbiz24.)

Low-income families to get apartments

2011-12-14T23:31:00.000+07:00

Top officials from the Ministry of Construction (MoC) said that housing developers had been given priority regarding tax exemption, land use tax breaks, soft loans from banks and a building density increase in order to help them build low-priced apartments.

Deputy minister of Construction Nguyen Tran Nam said that his ministry, on behalf of the State, has controlled the prices of these housing units while allowing developers to enjoy a average profit of 10 percent, satisfying both businesses and residents.

However, Nam suggested that low-income customers be given incentives to take out loans from banks and use the 10-year-rent-mortgage method in order to help them purchase their own apartments.

He said that Vietnam needs to step up research in material technology and interior design in order to create high-quality, affordable apartments.

Currently, MoC has planned to set up a housing savings fund to support low-income people, supplied in part by the State budget in addition to contributions from buyers.

The fund is expected to be managed by a not-for-profit company.

Due to tightened monetary policy over the past few months, buyers have begun to withdraw from bids on low-priced apartments. Many people have cancelled their purchasing contracts, stirring concerns over whether the supposedly "affordable" apartments deserved their title.

In response, Nam said bids from buyers have still outnumbered available units.He maintained that the calculated price of 10 million dong (US$ 480) per square metre was totally reasonable, but noted that in small cities such as Da Nang, Hue and Thanh Hoa, prices could drop even lower to about 5-6 million dong (US$ 240-288) due to lower land costs and available infrastructure.

MoC is now considering a draft decree that would allow housing developers to build apartments for lease, giving poor families the opportunity to rent in lieu of purchasing.

According to the ministry, around 5 percent of low-income families who were unable to make payment would be given priority to lease under the new decree.

(Source: VietnamPlus.)

Analysis: Vulture funds circle Vietnam's property market

2011-12-14T23:29:00.000+07:00

Vietnam's once-frenzied property market has ground to a halt, leaving local developers limping and international investors salivating at the chance of snapping up distressed deals.

With poorly-capitalized local developers struggling to complete projects, foreign funds say this is the opportunity they have been awaiting since the global financial crisis began.

"In the last 30 days, we've signed up two deals that I would put in the needy category," Peter Ryder, the CEO of Indochina Capital Corp, said in an interview at the end of November.

Property sales in Ho Chi Minh City have fallen by half this year while interest rates, which are hovering around 20 percent, have pushed buyers who need to borrow to the sidelines.

Only 5,470 properties changed hands in Ho Chi Minh in the first nine months of this year, according to brokerage CB Richard Ellis, down from 10,213 in the same period in 2010.

This has prompted Vietnam property investors, after years of waiting for the right time to buy, to say now is the time.

"It will be a better buying time than any time over the last four years," said David Blackhall, deputy managing director at Vietnam fund manager and property developer VinaCapital. "The market is going through a pretty challenging time."

The catalyst for the slowdown in home sales is rampant inflation, at 19.8 percent in November. Though interest rates look set to moderate next year, the damage has already been done to the property industry.

"The next 12 months will be difficult in real estate," Blackhall said. "The liquidity has basically gone out of the market, so it has really slowed everything down."

Blackhall says land prices have fallen 12 percent over the last 12 months, while condominium prices in Ho Chi Minh and Hanoi have fallen 10-15 percent over the last year. He expects a similar decline again next year for apartments in those cities.

A BROKEN MODEL

Vietnamese developers have typically pumped money into land and the foundations of projects and funded construction through sales and, as a last resort, bank borrowings.

That model is falling apart now that sales have dropped off.

"If they're half built, they can't leave it half built, so they have to carry on," Dominic Scriven, CEO of Vietnam fund manager Dragon Capital, said. "The key is where their existing financing has come from and what pressure they're under to repay that."

Scriven is starting to see "pockets of distress" in the property industry as a result. His company has a property team of six, which is now in talks with several developers.

"They were looking for distress in 2008, but there was very little," Scriven said, and that evaporated when a stimulus package was swiftly introduced. "This time around, we are getting calls that lead to sensible conversations."

The company, which is raising a new fund to invest in Vietnam, Laos and Cambodia, also has a property fund with $90 million in assets. Around 40 percent of that is currently in cash, which it hopes to invest in three or four deals, Scriven said.

The two deals Ryder struck at IndoChina include Ho Chi Minh residential developments where the developer ran into financing problems. IndoChina, which declined to identify the properties, will now look to reposition, redesign and sell them under the Indochina name.

The lender approached IndoChina on the first deal, a $40 million development that it bought outright. "The bank had a gun to the head of the local developer," Ryder said adding that financiers continue to approach his company. "I would be very surprised if we don't do several more deals."

HARD TO EXIT

The flip side is that international investors with property to sell are finding it hard to shift.

CapitaLand (CATL.SI), Southeast Asia's largest developer, is building 5,900 homes in Ho Chi Minh and Hanoi and is using the slowdown to target local developers and landowners.

"The current economic difficulties...present opportunities for us to explore good investment opportunities," the company said by email.

It has done two deals this year in lower-cost housing, buying majority stakes in joint-venture projects with Khang Dien House Trading and Investment KDH.HM and with Quoc Cuong Gia Lai QCG.HM.

Keppel Land (KLAN.SI) has 8 percent of its assets in Vietnam, with 22,000 homes in the works. It says it is taking a long-term view and is confident the market will recover.

Indochina, in which Japanese finance house Orix Corp (8591.T) owns a 25 percent stake, is currently working on sales at two projects. It has sold 90 percent of the apartments at the Hyatt Regency Danang. "We've covered our nut there, so there's absolutely no pressure there," Ryder said.

But the Indochina Plaza Hanoi is only 70 percent sold and the company is offering incentives such as a free parking space to tempt buyers. "We've definitely had to sweeten the pie, but not in a dramatic fashion," Ryder said. "We continue to sell two, three apartments per week."

VinaCapital has a large land bank in its VinaLand fund, which has a seven-year life that runs through 2013. But the land will take another four years to monetize, Blackhall said, so the company plans to ask investors to extend the life of the fund, giving it time to prepare the land for development or sell it when the market improves.

"You don't want to be selling everything off today because the market is not suited today," Blackhall said.

(Source: Reuters.)

Service apartment market forecast to boom in 2013: CBRE

2011-12-14T23:24:00.000+07:00

Vietnam is the 11th favourite destination of multinational companies in 2013-the time for the completion of a series of apartment projects.

Mr Marc Townsend, Managing General Director of CBRE Vietnam said the supply will continue to focus in two major cities of Hanoi and HCM City in the near future towards to the outskirts areas with more competitive and lower rental price.

HCM City will continue to lead the future supply with more than 4,500 apartments. Projects will leave to the edge area of downtown such as district 3, district 2 and district 7 and even spread to the developing areas such as Tan Binh district and Phu Nhuan district.

In Hanoi, the future supply will decrease with 938 units, mainly focusing in the western region like Tu Liem and Cau Giay districts, or district near the city's centre such as Tay Ho and Ba Dinh.

Projects continue to delay the inauguration progress. By the end of 2011, Hanoi and HCM City will welcome five new serviced apartment projects namely Keangnam Landmark 72 (providing Hanoi market with 378 apartments) and hotel projects of Nikko, Saigon Mansion, The Vista, An Phu Superior Villa Compound (providing HCM City market with 241 units).

New supplies will mainly focus in 2012 and 2013 but 85% are in the planning stage. Therefore, the construction plan may be reviewed depending on macroeconomic conditions.

Reviewing the overall serviced apartment market in the third quarter of 2011, according to the statistics of CBRE, HCM City led the number of serviced apartments with 3,590 units, followed by Hanoi with 2,300 units and Da Nang with 146 units.

Regarding prices issue, in HCM City, the rental price for apartments Grade A after hitting the bottom in Q3 2009 has surged 12.8%, reaching $37.58/m2/month. CBRE said apartments Grade A have long term potential when rental price has increased up to 10.5% and the vacancy rate has been down 11.6 percentage points over Q3 2010.

Conversely, the price of apartments Grade B has been down 8.7% over the same period last year. Some projects are in the adjustment period; especially the projects have been in operational for a long time in the market with an aim to catch up with new trend and luxury class prevailing in the market. Some typical projects are upgrading such as Saigon Sky Garden and Somerset Ho Chi Minh.

While HCM City market is divided according to the apartment grade, the Hanoi market is divided according to management methods - including apartments managed by foreign firms and self-managed apartments. In particular, the rental price increased by only about 2%. The strongest rise was recorded in foreign-managed projects (6%) after a slight fall in Q2.

CBRE also warned the fierce competition will take place on the serviced apartments market throughout Vietnam when tend that individuals buy villas and apartments for lease will still continue. This will help stabilize or even reduce the real rental prices in many projects, especially projects that do not have many services.

After the global financial crisis, the serviced apartments trend will be less bedrooms with a smaller size (1-2 bedrooms) and aims to buyers such as young professionals who are single, short-term work and according to projects (under one year leasing term).

Besides the monthly rental price, the managers will offer daily rental prices and compete directly with the hotel segment.

CBRE said that potential of serviced apartments in Vietnam still remains high thanks to increasing FDI (foreign direct investment) capital sources, trade surplus and high production growth, high rate of urbanization and the increasing number of international tourists. However, this segment is still left open and lacking of large supply.

Mr Marc Townsend cited, while the number of available serviced apartments for lease in HCM City at the end of Q3 2011 was 3,590 units, the number of labor license issued for foreigners in 2010 in the city was 6,700, excluding the large number of illegal workers.

(Source: Vietbiz24.)

Finance Ministry asked to mull property tax

2011-12-13T22:27:00.000+07:00

The prime minister has just assigned the Ministry of Finance to draft a property tax bill in an effort to fight speculation and to improve the efficiency of land use.

This issue has been discussed several times in the past, with many experts proposing to impose progressive tax on properties so as to prevent speculators on the property market from accumulating land and houses and manipulating prices.

Such a tax should also be imposed on those people with unused property.

In his instruction, the prime minister also asked the Ministry of Finance to review personal income tax imposed on the transfer of properties.

Regarding credits for the sector, the prime minister asked the State Bank of Vietnam to order commercial banks to restrict loans for site clearance, compensation, as well as luxury property projects. Loans to property traders must also be put under tight supervision.

Meanwhile, loans should be further extended for development projects to provide accommodations for poor people.

(Source: Saigon Times.)

More retail space on offer for tenants

2011-12-13T22:25:00.000+07:00

Tenants of retail space in the downtown areas of HCM City are offered with more choices as the number of projects starting operation is increasing.

The Vincom centre A complex project has just begun to offer the commercial space in preparation for the official opening of this building in October next year.

The project owner Vincom Joint Stock Company under Vingroup said it started seeking tenants for the 38,000-square-metre retail area as the project's hardware has been completed. However, the company declined to reveal the specific offering prices.

Located in the prime location known as Eden Quadrangle shaped by the four streets of Dong Khoi, Le Thanh Ton, Nguyen Hue and Le Loi, Vincom centre A is designed with six basements and nine floors.

Besides the commercial centre, Vincom centre A also includes the five-star hotel Vinpearl Luxury HCM City with some 300 rooms and an underground parking zone covering 25,000 square meters.

The project owner expected the commercial centre and hotel complex will satisfy the demand for shopping, entertainment and relaxation of citizens as well as local and foreign tourists.

In the future, the first municipal metro system will have a station based in the second basement of the commercial building, facilitating the travel of visitors.

Previously, Vingroup had put into service the Vincom centre B on Le Thanh Ton Street in HCM City's District 1. The group is expanding its commercial centre network nationwide to meet the rising demand for retail land space in big cities.

In addition to the Vincom centre A project, several large-scale projects are near completion to start offering the retail space in the near future.

For example, Phu My Hung Joint Venture Company just put into operation the commercial centre Crescent Mall along Nguyen Van Linh Boulevard in Phu My Hung New Urban Area in District 7.

The project worth 2.31 trillion dong in investment capital covers some 45,000 square meters in retail and commercial areas. At present, some 85 percent of the retail sites of the project have been occupied, with the leasing prices ranging from $40 to 60 per square metre.

Phu My Hung Company informed 113 leasing contracts have been signed for six floors of the building, including supermarkets, cinema complex and restaurants.

According to a market survey conducted by Savills Vietnam, the total retail space supply in HCM City is currently at 620,000 square meters. The market last quarter recorded the average occupancy of 86 percent, with a slight increase in leasing prices in the central areas, while those in the outskirts dropped a little bit.

(Source: Saigon Times.)

Merged bank to finance real estate projects: George Lee

2011-12-13T22:21:00.000+07:00

The three banks that have recently undergone the consolidation are about to finance for real estate projects, Phap Luat Tp. HCM (HCM City Law) newspaper quoted Dr. George Lee, Chairman of Macquarie Capital Investment Fund (Australia) as saying at the meeting on introducing unique real estate projects in HCM City held by HCM City Real Estate Association or HOREA on December 12.

Dr. George Lee is also a chairman of the advisory council for the consolidation of three banks Ficombank, Saigon Commercial Bank and TinNghiaBank.

Accordingly, investors and buyers of Times Square project, Royal Garden and Saigon Peninsula will be entitled to receive the funding from the merged bank.

Le Hoang Chau, chairman of HOREA, assessed that the three projects in terms of scale, location and design are of international standards, with unique values and they will represent for the rise of HCM City.

(Source: Vietbiz24.)

Foreign capital in property: Concerns galore

2011-12-13T02:30:00.000+07:00

Although the participation of foreign investors has contributed to unfreeze the property market, there is concern on hidden risks if foreigners dominate the market, the Vietnam Business Forum (Dien Dan Doanh Nghiep) reported.

The Ascott Co Ltd (CapitaLand) has spent $9.45 million buying back 90% stake of Thuy Duong Investment Joint Stock Co’s Somerset Central TD Hai Phong City condominium project located in Le Hong Phong Street, Hai Phong city.

According to data of Vietnam Department of Competition Management, there were 73 merger and acquisition deals worth total $2.67 billion till the end of September 2011 in the whole country, higher 1.5 times in value than the previous year. In which, 81.3% of M&A value was made by foreign investment groups in Vietnam and 22 deals were in real estate sector with the value of around $250 million.

Unfreezing market

The above statistics partially showed that foreign investment capital is the way-out for some domestic realty projects which are facing serious financial problems, helping the market avoid any expected collapse. Given assessment on property project transfers, Dr Su Ngoc Khuong—Investment Director of Savills Vietnam sad that disclosed transfer deals as mentioned above was only the surface but the underground part really is busy. Since the year early, the number of property deals Savills joined as a consultant has grown by 20-30% year on year. Especially, among the deals, buyers were mostly foreign investors. Usually, a deal lasts several months to whole year so if the negotiations are successful, according to Khuong, there will be a series of realty projects officially being changed the owners.

Most recently, the government’s decision to approve the national housing development strategy till 2020 said that the country’s average housing area is targeted at around 22 square meters of floor per person by 2015. Vietnam plans to attract new construction investment of 100 million sqm of floor. While the average housing area now is only 17 s.qm per person, showing the serious supply shortage in Vietnam. Foreign factor helps stimulate the idle market and create more supply to serve the social demand.

The market needs foreign capital, technology and management capacity, said Dong Thanh Tung—an experienced property investor. We might have to import technology and employees from foreign countries but local enterprises will have to learn much management experience and modern technology, and the market entry method from foreign partners. The direction seems to be better than the trend of changing design, inner decoration or re-projection in view to cut investment costs as some project investors are doing.

Reasonable fears

Dr Vu Dinh Anh, Former Deputy Head of the Market and Price Research Institute said that there had not been accurate figures on foreign investors as well as their real investment value in Vietnam’s realty market. But what we should pay attention is the disbursement matter rather than the capital level they committed. Because, once the foundation is completed, investors are able to mobilize capital and when seeing upheavals in the property market, they will withdraw capital immediately. The government should keep an eye on gaps in the laws regarding foreign factors in the real estate market, he recommended.

Economists feared that when FDI inflow means the risk of increased trade deficit for the future because investors have to import technology, materials, and workers to implement projects. Moreover, the realty projects are not involved in export operations so this will cause difficulties for Vietnam’s foreign currency balance as foreigners earn Vietnamese dong and then repatriate foreign currencies.

(Source: Vietbiz24.)

HCM City to retain land price framework till 2012

2011-12-13T02:28:00.000+07:00

HCM City People's Council has recently agreed to retain the city's land price framework of 2011 in 2012, the local newswire Saigon Giai Phong reported.

Accordingly, the city's highest land price will be 81 million dong per square metres in three major streets namely Dong Khoi, Nguyen Hue and Le Loi, in district 1 and the lowest will be 110,000 dong/sqm in Can Gio district.

In district 2, the lowest land price will be 1.8 million dong/sqm in some streets such as Binh Hung, road 8, road 11 in Binh Trung Tay and the highest will be 11 million dong/sqm.

In district 5, the lowest will be 9.4 million dong/sqm in Ba Trieu street crossing Ly Thuong Kiet to Trieu Quang Phuc and the highest will be 33 million dong/sqm in Nguyen Trai Street, crossing Nguyen Van Cu to Nguyen Tri Phuong.

The lowest agricultural land price will be nearly 45,000 dong/sqm and the highest will be 190,000 dong/sqm.

(Source: Vietbiz24.)

Housing price in Vietnam may decrease further by 40%, VAFI expects

2011-12-13T02:26:00.000+07:00

The housing price for low-income earners in provinces will be only 6 million dong per square meter and in Hanoi and HCM City at around 10 million dong per sqm if Vietnamese firms are able to apply new technologies and a suitable model, the Nguoi Lao Dong [The Labourer] reported.

Vietnam Association for Finance Investors (VAFI) has sent a document to Prime Minister, proposing basic measures to develop social housing area and lower prices of small apartments (35-70 square meters) by 30-40% through exempting all relevant taxes and fees and using preferential credit regime. However, the information was assessed to be unfeasible, which mainly aims to help the real estate companies in the difficult period.

VAFI proposed that the taxes needed to be exempted are 10% VAT for low-income earners as purchasing houses, tax on land using right transfer, registration tax for house purchasers and CIT on the companies building houses for low-income earners.

Regarding preferential credit, the Association asked the Mekong Delta Housing Development Bank (MHB) to provide soft home loans at below 10% per annum to the house purchasers and enterprises who can meet full of requirements to carry out housing construction projects for low-income earners. VAFI believed that people need to have initial amount of 200-400 million dong as wanting to buy houses at 350-700 million dong.

Disagreeing with VAFI’s recommendation, Dr Dang Hung Vo confirmed: “the proposal is not a proper solution for the problem of reducing house prices for low-income earners”.

The proposal seems to help enterprises to reach benefits from the State, not for low-income earners. Sharing with the point of view, Dr Nguyen Truong Tien—former Deputy General Director of Hanoi Construction Corp noted: “Vietnam’s condominium price is higher around 100% than Asean and China’s because of the reliance on many factors and fake information”.

Reducing housing prices for low-income earners requires the activeness of enterprises in applying new technologies and cutting management costs (including sensitive costs such as interest rates and cost for speeding up projects), Mr Dang Hung Vo remarked. A lot of construction technologies such as 3D Panel may bring housing price down to below 10 million dong per sqm, even to 6-7 million dong/sqm. But enterprises ignore to apply these technologies.

According to Dr Nguyen Truong Tien, Vietnamese engineers are capable of doing low-cost housing but the important thing is that enterprises only care about number of apartments in a building and prices instead of seeking and applying new technologies to cut down cost prices. This leads to low-cost housing price at 11.6 million dong per sqm equaling to nearly $600/sqm at this time while a German-Malaysian group offered the technology of building 20-story building at only $200 per sqm with the equal quality.

He also recommended, the State needs a pilot housing program in 5 selected locations in the country and then assigns to engineers to design, apply to build housing at 8-9 million dong or 10 million dong per sqm.

The Ministry of Construction proposed and got okay to form Housing Saving Fund through surveying the successful fund model in China and South Korea, the Vice Minister Nguyen Tran Nam reported. This is the non-profitable fund with the purpose of lending soft loans to low-income earners and low-cost house developers. Once the fund is formed, the operation sections may be added with leasing and purchasing methods, payment time within 10-20 years with the initial deposit of around 20% of house value.

(Source: Vietbiz24.)

Foreign capital to thaw property freeze

2011-12-10T19:41:00.000+07:00

Local property firms are scaling-up efforts to lure foreign capital amid a credit squeeze.

Savills Vietnam and Savills Japan recently jointly held a workshop to introduce investment opportunities into Vietnamese properties in Tokyo, while Savills Vietnam will make a foray into some other Asian markets like South Korea, Hong Kong and Taiwan in the coming time.

According to Savills Vietnam investment director Su Ngoc Khuong, 20 projects were presented in Japan including residential block, office building and trade centre segments concentrated in Hanoi, Ho Chi Minh City, Nha Trang and Binh Duong.

“It is now a time a number of investment funds terminate operations and source extra capital sources to establish new ones, meanwhile scores of capital-strapped local property firms resort to distribution agents like Savills and CBRE to help them woo foreign capital,” said Khuong.

Unlike these firm, Phu Cuong Group Joint Stock Company, based in Mekong Delta Kien Giang province, acts on its own to lure foreign investment into its projects.

The group’s representative Nguyen Phi Son said the group focused on seeking investors for its Phu Cuong sea-encroached urban area over 168 hectares in Kien Giang province’s Rach Gia city.

“Looking for foreign capital emerges as a viable option to capital-thirsty local property firms because besides to strong finance, foreign investors have a wealth of experience in project development,” said Son.

Recently, CotecLand reportedly clinched a strategic cooperative contract with Japan’s leading property group TamaHome.

Ben Thanh Property director Hoang Cao Tri revealed his firm wanted to team up with healthy foreign financial partners for its rich portfolio of 10 property projects.

“The company does not limit investment cooperation models with potential foreign partners,” said Tri.

Local property firms stepped up efforts to lure foreign capital to settle their capital bottlenecks in the context the State Bank has recently partly loosened credit regulations towards property projects.

Under central bank’s Official Document No 844 in late November 2011, loans for repairing and purchasing houses using salaries and wages of borrowers to repay, loans to complete housing development projects for handover or putting into operation before January 1, 2012 as well as loans for housing projects for lease and sale, or accommodation for low income earners in industrial and export processing zones and economic zones will be excluded from “non-production credit” conditions.

(Source: VIR.)

Not all property projects are suffering

2011-12-09T19:31:00.000+07:00

Scores of villa and second home projects have enjoyed upbeat sale figures amid a dormant property market.

A sequence of big property projects were launched and offered for sale since late November 2011 and reported good sales figures.

Among those are Xanh villas, Nine Ivory Eco-Resort & Country Club, Cat Ba Amatina, The Empire and Ocean View, just to date a few.

Xanh Villas, developed by Xuan Cau Property Company Limited, occupies 50 hectares in Hanoi’s Thach That district.

Five-star hotel and apartment development The Costa Nha Trang, developed by TD Joint Stock Company, reported encouraging sales. By date November 2011 nearly half of project apartments found customers with prices averaging from 44-60 million dong ($2,090-$2,850) per square metre, according to a representative from Knight Frank Vietnam, the project distributor.

Costa Nha Trang, with 14 villas and 228 apartments with areas ranging from 58 to 249 square metres and worth $147 million in total investment capital, is positioned next to 308-room Crown Plaza Hotel managed by InterContinental Hotels Group.

In late November 2011 in Hanoi, Archi Investment Joint Stock Company launched to the public its international standard resort Nine Ivory Eco-Resort & Country Club which covers 12ha in Hanoi’s Ba Vi district.

The project encompasses 79 hillside villas with area ranging from 300 to 600sqm together with a five-star service system.

In the central region, later last week, Taseco launched its Oceanviews Apartment Hotel in Danang city’s Son Tra district by the side of My Khe beach. The project benefits from a full range of utility services to serve the residents such as a swimming pool and spas.

Earlier, the Thanh Do Investment Development and Construction presented to Hanoi customers its hi-end second home and resort project The Empire also positioned in Danang city.

The $476 million, 51.5ha project occupies an auspicious position between Danang Golf Club and Golf Montgomerie Links, facing Co Co River in the west and sea areas in the east.

The project’s planning is handled by Wimberly Allison Tong & Goo NA (WATG)- US leading group in hotel, resort and trade centre design consultancy whose brand was manifested through a sequence of top-grade properties in over 160 countries and territories.

(Source: VIR.)

Hanoi, HCM City listed Asia's most expensive cities

2011-12-09T19:27:00.000+07:00

Hanoi and HCM City are amongst the 50 most expensive locations in Asia, according to a recent survey by the British assignee consulting firm ECA International.

In the ECA's Cost of Living Survey issued on December 7, Hanoi takes the 41st place, and HCM City, 43th, in the list of the most expensive locations in the region for international assignees.

For the second consecutive year, Tokyo remains the most costly location both regionally and globally, with the Japanese yen remaining strong and rising by 20 percent compared to the US dollar for the last twelve months, the survey shows.

Three other Japanese cities, including Nagoya, Yokohama and Kobe, also take the next three top positions.

Singapore stands at the sixth place, while other expensive locations in the top ten are Seoul and Busan of Korea, and Hong Kong, Beijing, and Shanghai of China.

Pakistan's Karachi comes at the bottom of the regional ranking.

ECA International's cost of living indices are calculated based upon surveys carried out annually in March and September using a basket of day-to-day goods and services.

The data is used by ECA clients to calculate cost of living allowances for assignees, such as dairy produce, meat and fish, miscellaneous goods, services, clothing, and meals out.

Certain living costs such as accommodation, utilities such as electricity, gas, and water costs, car purchase and school fees are not included in the survey since they can make a significant difference to expenses, the survey states.

According to ECA, the last 12 months have seen considerable increases in the cost of food, oil and other commodities in many parts of the world.

Prices have risen by over 8 percent in Asia, while the figure in Vietnam is 14.2 percent, making the country one of the locations which has seen the biggest increases in the local prices of items in ECA's basket of goods and services.

"While in locations like Singapore, price inflation has worked alongside exchange rate movements to push a location up the cost of living ranking, in other cases currency fluctuations are still outweighing the impact of inflation," Lee Quane, Regional director, Asia for ECA International, said in statement.

"For example, despite dramatic price increases in Vietnam, the devaluation of the dong earlier this year has caused locations there to drop down the ranking. So while locals will see their costs going up, the spending power of assignees will have increased due to the effect of exchange rates."

(Source: Tuoi Tre.)

Hanoi's highest land price likely to be fixed at 81m dong/sqm

2011-12-09T19:25:00.000+07:00

Hanoi People's Council has approved the city's land price framework for 2012 with the agreement of 100% of delegates whereby the land price in districts will be adjusted in some locations and streets but it will not exceed the land price framework prescribed by the government.

Accordingly, the land price in districts will be at minimum 2.34 million dong per square meter. The lowest price will be in the branch area of Road 72 crossing Duong Noi ward, Ha Dong district. The maximum price will be 81 million dong per sqm, remaining unchanged from 2011, which will be applied in streets of Hang Ngang, Hang Dao, Ly Thai To in Hoan Kiem district.

In the town of some outskirt districts and wards of Son Tay town, the land price will be decreased gradually according to the distance from the centre of Hanoi. Towns of districts (except districts of Tu Liem, Gia Lam, Thanh Tri, Hoai Duc, Dong Anh, Dan Phuong and Thuong Tin) will have minimum land price of 750,000 dong per sqm and maximum 8.04 million dong per sqm.

After the adjustment, land price in wards of Son Tay town will be from 1.584 million dong to 16.7 million dong per sqm.

The adjusted land price in districts of Tu Liem, Gia Lam, Thanh Tri, Hoai Duc, Dan Phuong, Thuong Tin and Dong Anh will range between 1.92 million dong per sqm and 27.6 million dong per sqm. The border areas of districts of Tu Liem, Gia Lam, Thanh Tri, Hoai Duc, Chuong My and Thanh Oai will have maximum land price of 32.4 million dong per sqm.

Land price in traffic hubs in districts of Tu Liem, Gia Lam, Thanh Tri, Hoai Duc, Dan Phuong, Thuong Tin, Dong Anh, Me Linh and Son Tay will be adjusted to approach the maximum price framework of the Government. Land price in traffic hubs of remaining districts and towns will essentially remain unchanged. The adjusted land price in traffic hubs will be at least 433,000 dong per sqm and highest at 11.25 million dong per sqm.

Land price in rural residential areas in districts and Son Tay town will be basically kept at from 250,000 dong per sqm to 2.25 million dong per sqm. Non-agricultural business and production land in urban zone of districts will be from 1.17 million dong per sqm to 40.5 million dong per sqm.

The land price framework in 2012 will be used to calculate the land use fees and other fees.

(Source: Vietbiz24.)

Office buildings on sale in HCM City

2011-12-09T19:23:00.000+07:00

The office-for-lease market in HCM City has seen a series of project transfer projects in the recent years and the trend is increasing in the current difficult context when many projects are in negotiations and will be changed in terms of owners, according to the Saigon Economic Times.

Actually, the M&A deals of property projects are common in business when investors gained expected profits. However, the economic crisis pushed many investors to fall in financial hardships, which was one of factors forcing investors to seek partners for transfer. Due to this, the project transferring market is getting busy.

Notably, it took one year for the consulting firm Jones Lang LaSalle Vietnam to complete the deal of transferring Centre Point office building in Nguyen Van Troi St Phu Nhuan Ward, HCM City from the investor Refico to a Japanese property investment fund.

Yet, the fund has decided to hire Jones Lang LaSalle Vietnam in seeking a buyer to transfer the building after almost 7 months from the repurchase deal.

David Lyons, General Director of Jones Lang LaSalle Vietnam said that the decision was made based on the deadline of closing the fund in Q1 of 2013 so the fund is divesting capital from all investment projects.

The matter is whether the fund is able to find another prospective investor to transfer this project or not while the office-for-lease market is suffering much pressure of price discount as well as difficulties in seeking renters.

Lyons added, the transfer is the fund’s investment strategy and now the leasing capacity in Centre Point building is almost 100%, much higher than previous period. Thanks to the effective management helping reduce costs and increase revenues, the fund will likely earn profits as transferring the project.

According to him, the brokerage Jones Lang LaSalle Vietnam is working with three investors from Japan (1) and Singapore (2) on the transfer deal.

In another deal, Royal Tower trade centre and office building in Nguyen Luong Bang St, Phu My Hung urban area is also seeking the help of other investors to complete the work via the brokerage of Jones Lang LaSalle Vietnam.

80% of workload of the 21-storey Royal Tower with total floor area of 41,000 square meters (consisting of 17 offices for lease and four retail floors) has been finished. It will be completed in next 6 months.

As stated by Jones Lang LaSalle Vietnam, the investor of this building is a local firm who is seeking to cooperate with the investor who has financial strength and experiences in managing office building.

Investment in available projects is also an option of foreign investors who do not have offices in Vietnam and experiences in contractor management in the country. Instead of spending on establishing offices, these investors only need to invest in available buildings to minimize risks. There are three foreign investors paying attention to Royal Tower, according to the General Director of Jones Lang LaSalle Vietnam.

Market observers said that selling back real estate projects is attributed to lack of experiences in developing projects and pressure of repaying bank debts.

Uncompleted Lam Son Square retail and trade centre complex in Vung Tau City, thanks to the brokerage of Jones Lang LaSalle Vietnam, reached the partner for transfer. The 8-storey complex was invested by a local firm in venture with a Vietnamese overseas investor. Only two stories of this building were finished and investors are seeking buyers with a price of $10 million.

Similarly, Vingroup lately announced it would transfer whole office block B of Vincom Centre Hanoi in Ba Trieu St, Hai Ba Trung Ward to Vietnam Technological Commercial JS Bank (Techcombank). Previously, the group had sold Block A to Bank for Investment and Development of Vietnam (BIDV).

The market also started to see office wholesales [selling whole floor instead of monthly leasing. For example, Petroland Tower in Phu My Hung urban area (Dist 7, HCM City) was operational from December 2, but around 80% of total 30,500 square meters of office-for-lease area has been sold to the companies with strong finance.

The developer Petroland said 17 of 21 stories of the tower were sold at 37 million dong per square meter and the method has been applied since the work was started.

Petroland will sell back 10 stories of office building totalling over 2,800 sqm in Truong Dinh St, Dist 3, HCM City but the particular price has not been announced.

In other markets, investors of trade centre or office buildings used to sell projects as the projects were performing well to take capital to invest in others. But the trend is increasing in Vietnam recently.

(Source: Vietbiz24.)

Vietnam real estate market eagerly await inward remittances

2011-12-07T21:36:00.000+07:00

Inward remittance flow at the year end is seen as the sole hope of real estate investors as all channels of capital mobilization for projects are almost getting stuck, Vietnam Economic Times reported.

Property investors are trying to survive by waiting for a new capital flow which is expected to feed the unmoved projects because of capital shortage.

The expectation is reasonable because Vietnam is one of the highest remittance recipients in the world. Moreover, in the gloomy air of finance and stock market, a part of overseas remittance to Vietnam may be invested in property.

Data of the State Bank of Vietnam (SBV) showed that despite the world economy remains difficult, the amount of inward remittances to Vietnam during this year continues increasing sharply. In the first three quarters of 2011, the amount averaged at approximately $2.5 billion per quarter.

In the whole year, the country’s inward remittance is estimated at around $8.5 billion, $500 million higher than 2010.

Reportedly in November by World Bank and Western Union Asia-Pacific, four million Vietnamese overseas are living, working and studying in 101 nations, including 400,000 exported workers. Vietnam was ranked in top 10 remittance recipients in the world.

With these data, the property investors are expecting a new capital source to boost the uncompleted projects based on the National Finance Supervision Committee’s latest survey showing that 4,000 households received remittances, and 52% of the amount was invested in real estate and the remainder was kept in savings and consumption.

Experts said, while the gold and US dollar markets are not favourite investment channels any more, the stock market also is going down. Especially, as banks were forced to apply the ceiling deposit rate of 14% pa, a large amount of deposits was withdrawn from the banking system. It is forecasted that a part of the deposits were re-invested in the property market.

However, according to statistics of WB, up to 90% of overseas remittances are flowing to rural areas where the workers came from. Therefore, Vu Tuan Hung—Director of Thinh Phat Construction Co said, investors of condominium projects in big cities will be hard to benefit from the overseas remittance.

Only a small part of the remittance may be sent to banks or invested in some channels by relatives of overseas senders.

Since 2010, the number of Vietnamese overseas registering to buy houses in homeland has declined. But, in fact, the number of relatives of Vietnamese overseas registering to purchase properties is increasing.

Director of Archi Invest Nguyen Thanh Nam was quoted as saying that his firm is expecting much in overseas remittances at the end of this year. To head off the new wind, Archi Invest decided to open the sale of the Nine Ivory resort project in Ba Vi Dist (Hanoi) to meet the remittance recipients’ demand of long-term investment.

(Source: Vietbiz24.)

Vietnam targets to build 10m sqm of social housing by 2015

2011-12-06T09:23:00.000+07:00

Vietnam targets to build 10 million square meters of social housing by 2015, which is one of the points of the National Housing Development Strategy to 2020 and vision to 2030 approved by Prime Minister, the government said in its website.

In addition, the country will focus on building accommodations for low-income earners in urban areas, meeting the accommodation demand of 60% of students in universities, colleges, professional schools and vocational centres and 50% workers in industrial zones, finishing to fund 400,000 households (according to new poverty criteria) in rural areas to improve housing by 2015.

Moreover, the ratio of solid housing in the country is expected to reach 62%, that of condos in housing projects in Hanoi and HCM City will gain over 80%, that of urban areas Grade I and II is targeted to achieve over 50%, urban areas Grade III at 30% and the national housing area is estimated at 22 sqm per person.

By 2020, there will be no simple house nationwide, citing the strategy.

In the period of 2006 to 2020, Vietnam is trying to construct around 12.5 million sqm of social housing to meet the demand of 80% of students and 70% of workers in industrial zones.

Till 2020, the average housing area of Vietnam is strategized at 25 sqm per person while the minimum housing area is 8 sqm per person. The figures are expected at 30 sqm/person and 12 sqm/person in ten years later.

(Source: Vietbiz24.)

Supply in HCM City's real estate market forecasted to decline

2011-12-06T09:21:00.002+07:00

At present, many real estate projects in HCM City have been implemented in slow pace or halted. In the coming years, there would be shortage of supplies.

Investors in most of real estate projects in HCM City have had to adjust the implementation plan for their ongoing projects due to difficulty in markets, low liquidity.

In Tan Phu Dist, many projects had been kicked off construction works but then implementation process was halted. In March 2011, some real estate exchanges announced to offer products in Hiep Tan Apartment Complex and kept the deposit for some customers with commitment of signing the sales contract in May 2011. However, recently, some customers came to Phu Nhuan Economic Development Joint Stock Co, the distributor of Hiep Tan project to ask for refund because the company did not follow the commitment with customers.

Kenten Residences project (conducted by Tai Nguyen Co as the main investor) was one of the largest high-class apartment complex projects in Nha Be Dist with over 1,600 apartments. The raw construction on some of the apartment blocks has been almost completed, but the construction work has been halted for months.

Meanwhile, some large-scale projects haven't been kicked off construction works, despite having detailed construction plan up to now, for example Vietnam Financial Centre (VFC) project that Berjaya Land Berhad Co, under Malaysia-based Berjaya Group was the main investor.

The project has total investment capital of $930 million, to be sited in an area of 6.8 hectares. It would be a complex of five towers of 39-48 storeys after construction. However, the construction hasn't been started.

As planned, in early 2012, Vietnam Real Estate Co (VNI) would kick off construction on the high-class apartment complex of Vinaland Tower in Dist 7, HCM City. However, this project may be delayed due to gloomy real estate situation.

Nguyen Van Duc, vice director of Dat Lanh Real Property Co stated that there would be few new projects to be kicked off in the near future. Therefore, it was predicted that there would be shortage in real estate market in HCM City in the near future.

(Source: Vietbiz24.)

Urban condominium ratio must reach 90pct by 2020

2011-12-06T09:20:00.000+07:00

The Vietnamese Prime Minister has recently approved national housing development strategy 2020 and vision till 2030 whereby by 2020 the condominium ratio at housing development projects in special urban zones (Hanoi and HCM City) must reach over 90% and urban from Type I to Type II will reach 60%.

For urban Type III, the condominium ratio must reach more than 40% and the ratio of house for lease must reach minimum 30% of the total housing area.

By 2015, the strategy aims to meet about 60% of the students of universities, colleges, professional secondary schools and vocational training schools and 50% of workers in industrial zones who are in need of domicile and complete supports to about 400,000 households (according to new poverty standard) in rural areas to improve their housing.

The national average housing area would reach about 22 m2 of floor/person. The national permanent housing ratio would reach about 62%, the ratio of apartment in the housing development projects in Hanoi and HCM City would reach over 80%, urban Type I, II at over 50% and urban type III at over 30%.

In 2016-2020 period, the country will strive to invest in building at least 12.5 million m2 of social houses and meet the housing demand of about 80% of students, pupils and about 70% of workers in industrial zones.

By 2020, the strategy aims to increase the national average housing area to about 25m2 floor/person, strives to achieve the minimum housing area target of 8 m2 floor/person, the ratio of permanent house in the country at about 70% and erase all simple houses on a national scale. By 2030, the strategy strives to reach the national average housing area target at about 30m2 floor/person and minimum housing area at 12 m2 floor/person.

(Source: Vietbiz24.)

Investors offloading property to take sell-off houses in Hanoi

2011-12-06T09:18:00.000+07:00

Investors are offloading real estate’s to buy sell-off houses due to difficulties in capital source and gloomy market. The tendency is expected to continue in the coming time, the local newswire VnMedia reported.

Property offloading is taking place in both foundations of projects and new urban areas with many villas, associated houses.

Pham Tuan, a broker in My Dinh, Hanoi said that his office last week received a case of offloading villas in My Dinh I area at 12 billion dong per nearly 100-square meter-associated house. Previously, the house had market price of 15-18 billion dong.

In Trung Yen new urban area (Yen Hoa, Cau Giay Dist), the house price declined slightly but the offloading also is taking place. A lot of house owners accepted to discount 3 billion dong per 80-sqm house. In Ciputra urban area, the house price slumped from 180 million dong per sqm to 150-155 million/sqm.

The offloading tendency is both happening in the real estate market and big banks. At this time, a large number of houses, villas are liquidated by banks at cheap prices but only few buyers showed up because value of properties is so high. Banks’ selling of mortgaged properties requires a particular process and each bank has their own debt handling process. In details, as the debt payment deadline comes, customers cannot repay debts so banks will send petition to authorities. When authorities release final decision, assets will belong to banks and then banks have right to transfer assets to debt handling agencies who will be in charge of selling.

For easier lenders, when customers borrow money, they [banks] will immediately sign house purchase contracts ruling that if customers cannot repay debts, houses will belong to banks.

Ngo Tri Anh, Director of Vietland real estate firm said that the property offloading in new urban areas will not happen massively but this move helps establish a new price for the market segment.

(Source: Vietbiz24.)

Serviced apartment market looks bright

2011-12-05T09:51:00.000+07:00

Investors should pay heed to the potential for serviced apartments in Viet Nam because demand for this segment was forecast to increase and current supply was limited, Marc Townsend, managing director of CBRE, said at a conference on Thursday.

Co-organised by Thailand-based Irving Seminar&Training Co and its local partner Lean Media, the conference attracted the attendance of many property investors, developers, operators and consultants.

Townsend said more and more expatriates were frequently travelling or coming to live and work in Viet Nam and this would drive demand in the serviced apartment market.

According to Trends in Managing Mobility survey 2010 by ECA International, Viet Nam will be the 11th most common destination of companies sending staff on international assignments up to 2013. This is likely to ensure that the demand for accommodation from companies sending staff into Viet Nam is likely to remain strong in the next three years.

However, the supply is too small and has not yet met the demand. The South Korean community alone has 70,000 families, indicating that demand from expats is high.

HCM City has 3,595 units, mainly in District 1 (47.3 per cent), District 7 (13.5 per cent), District 3 (12.4 per cent), District 2 (10.5 per cent) and Binh Thanh District (9.2 per cent).

Ha Noi has 2,367 units, focused in the districts of Tay Ho (31 per cent), Ba Dinh (25 per cent) and Cau Giay (20 per cent).

Da Nang has 146 units from four projects.

The serviced apartment market will see new projects come into the market by the end of this year.

HCM City has four new projects – Hotel Nikko Sai Gon (53 units), Sai Gon Mansion (20 units), the Vista (100 units) and An Phu superior Villa Compound (68 units) – that are set to open soon.

In Ha Noi, the Keangnam Landmark 72 (378 units) is also expected to be on the market soon.

Jean Francois Chevance, director of Design Archetype Group, said serviced apartments were generally business-oriented with smaller units, fewer bedrooms (1-2 bedrooms) preferred.

Andrew Langdon, senior vice president of Jones Lang LaSalle Hotels, advised Vietnamese property owners to seek international companies to manage their serviced apartments.

This would bring benefits including a global profile, brand awareness, professional marketing, and structured and standardised operating procedures, he said.

Property owners and hotel operators should maintain equity in relationship and balance the sharing either of success or of challenges that require greater efforts, Langdon added.

Marc Townsend said the next wave of development within the hospitality sector would be in terms of an increased supply of serviced apartments. Hence, industry players including international ones were ready with expansion plans to explore its potential and opportunities.

Despite ample opportunities, there were several challenges that inhibited growth of this segment in Viet Nam. The biggest challenge lied in land prices and land sources, he said.

Many projects were also being suspended because of a capital shortage, he added.

(Source: Vietnam News.)

Property builders advised to lessen reliance on banks

2011-12-03T15:19:00.001+07:00

Realty investors and developers need to minimise dependence on banks so as to avoid shocks upon any monetary tightening and to survive in the short- and long-term, according to Savills Vietnam.

Su Ngoc Khuong, director of the investment department of Savills, said that local realty investors and developers have mainly relied on banking loans to do business instead of joining hands together to enhance their financial capability.

Cash-strapped developers at the same time also suffer from a dreary market now as their costly products have failed to meet the fast-rising housing need of target customers, Khuong told the Daily.

However, the situation also offers an opportunity for the local builders to change for the better, Khuong noted, adding that industry players need to think twice regarding business plans heavily depending on loans provided by banks.

He warned that the property market would be badly damaged upon any change to the credit policy.

Khuong pointed out the recent move by the central bank to partially loosen credit for the property segment has partly worked as developers now are able to access more loans to cover input costs such as building materials and salaries.

Furthermore, the newly-adjusted credit policy has helped ease the burden shouldered by those in need of housing as well as developers in terms of lending rates and capital shortage, Khuong stressed.

(Source: Saigon Times.)

Singaporean firms interested in property market

2011-12-03T15:17:00.000+07:00

Almost 100 leading Singaporean businesses operating in real estate, infrastructure and education are attending and introducing products at the Vietnam-Singapore Business Forum in Hanoi.

The three-day forum, which opened on November 30, focuses on real estate which is considered an attractive investment channel of Singaporean investors.

Vice President of the Vietnam Chamber of Commerce and Industry (VCCI) Doan Duy Khuong said Vietnam and Singapore have enjoyed time-honoured relations, especially in economics and trade.

As of October 20, 2011, Singapore had invested over US$ 23.3 billion in 968 projects in Vietnam, ranking third among foreign investors. Of the total investment, US$ 7.6 billion has been poured into 50 property projects.

Two-way trade reached US$ 10 billion last year, a quadruple increase year-on-year.

According to the VCCI official, the combination between the abundant workforce of Vietnam and high technology of Singapore will help establish develop economic zones and improve the competitiveness of both countries and Asean.

(Source: VietnamPlus.)

Real estate companies facing difficulties in accessing “clean land”

2011-12-02T09:40:00.001+07:00

Despite the improvements in ground clearance and land withdrawal, factually many real estate companies still are facing difficulties in accessing “clean land”, Vietnam Chamber of Commerce and Industry (VCCI) spoke at the meeting on November 30 to announce results of examining 16 laws relating to business and production.

Law on Land and Law on Real Estate are two of these 16 laws and nearly 200 documents (lower than law in terms of enforcement) which were reviewed at over 2,000 enterprises by a group of experts. The results showed that in a certain aspect, the above laws created better conditions and partially removed barriers to help enterprises and investor’s access resources as well as empowerment in the market.

But complex laws and regulations in field of real estate licensing, land withdrawal, land handing-over, ground clearance are reducing the investment attractiveness and making negative effects to the business freedom right of firms.

Dr Nguyen Van Minh, member of the review group said that the selection of investors in line with bidding mechanism remained limited and inadequate for which there is the unhealthy competition among enterprises.

For example, some documents allow investors to raise advanced capital of customers at any different time but Law on Land permits enterprises to access capital source of licensed credit institutions only.

In addition, whilst regulations on real estate allow enterprises to ensure duties by assets which may be constituted in future, Law on Land says no to the activity.

A lot of regulations are not feasible or matched with the reality, leading to the demand and supply mismatch, Dr Minh said, adding that pursuant to current rules, foreigners are disallowed to access land through Vietnamese institutions, households and individuals and only allowed to receive land from the state. The matter has affected strongly to the property supply.

Moreover, most local governances applied the annual land price frame unstably, impacting to business strategy as well as land prices. Laws and documents have not ensured maximum rights of enterprises in the process of land usage.

VCCI chairman Vu Tien Loc said that the results would be sent to the government, National Assembly and relevant agencies for more suitable amendments.

(Source: Vietbiz24.)

VAFI recommends tax and fee cuts on housing construction for low-income earners

2011-12-02T09:39:00.000+07:00

Vietnam Association for Financial Investors (VAFI) has recommended reducing all taxes and fees related to housing construction for low-income earners (with area range of 35-70 square meters) by 30-40%, the Dien Dan Doanh Nghiep newspaper reported.

Accordingly, the taxes and fees which are expected to be cut include a VAT reduction of 10% for low-income earners as purchasing houses; tax of land using right transfer for real estate companies as building houses for low-income earners, a cut in registration tax for house purchasers. The State needs to have tax exemption policy for individuals and institutions who invest in housing-for-hire projects for low-income earners.

Earlier, the government had formed Mekong Delta Housing Development Bank (MHB) with initial view to fund housing development in the region. But MHB has not met the demand so it should be restructured so as to be matched with the state’s policies in housing construction for low-income earners.

In the new phase, MHB provides soft home loans (at below 10% a year) to real estate companies who qualify conditions to build low-cost houses, and to house buyers.

With the above policy, low-income earners with initial capital amount of 200-400 million dong will be able to buy a house at 350-700 million dong.

(Source: Vietbiz24.)

Office space now for sale

2011-12-01T19:00:00.000+07:00

Several investors of office building projects in Vietnam stuck in the dreary market have chosen to sell their products to companies instead of leasing them in an effort to recover capital as soon as possible. The move is deemed as unprecedented on the local property market.

Petrocapital and Infrastructure Investment JSC (Petroland), which plans to inaugurate its Petroland Tower in the urban town of Phu My Hung in HCM City's District 7 this weekend, said it had sold 80 percent of the office space instead of leasing it as originally planned.

The 33-story Petroland Tower worth over 1 trillion dong in investment capital with the total floor space of some 57,000 square meters consists of commercial centre, office building and high-grade apartments. The office space covers 30,500 square meters at the building.

Similarly, VinaCapital Real Estate Company has hired the property service provider Cushman & Wakefield as a broker to offer the Metroplex office building project on Nguyen Luong Bang Street in Phu My Hung.

Cushman & Wakefield said it is seeking partners to acquire all or part of the nine-story building covering 14,000 square meters.

According to property experts, the partial acquisition of the office building is popular in other countries but still unfamiliar to the Vietnamese market. The wholesale of office space helps investors recoup capital quickly and offer cheaper facilities for companies.

Office rents continue to fall

Meanwhile, rents of offices in HCM City have been in the downward spiral for nearly three years and the situation is projected to continue.

Statistics of several property service providers show the prices of grade-A offices have plunged to around $30 from the $50 per square metre recorded in 2008.

Chris Currie, office service director of CB Richard Ellis Vietnam (CBRE), said the market trend is favourable for tenants because of the oversupply and the incentives and flexible terms of project owners.

In addition, the quoted office rents in dong help do away with exchange rate risk.

The market has seen more tenants switching from grade-B to grade-A office buildings, from outdated to more modern facilities, said Currie.

Some market research companies remarked the office leasing prices in Vietnam, specifically in HCM City, are still higher than in the region. However, Nick Axford, head of CBRE's research department in Asia Pacific, said office rents in HCM City are now more reasonable than three years ago.

According to Cushman & Wakefield, there are currently some 1.2 million square meters of office space in the city, which will increase by a half in 2012 with some projects in the downtown area being finalised.

The offered prices for offices for lease are predicted to keep dropping in the near future. However, the market supply after 2012 may be restricted due to many projects in suspension.

Source: Saigon Times

Manufacturers enjoy lower rent

2011-12-01T18:58:00.000+07:00

The government issued Decision No 2093/QD-TTg on November 23 to reduce businesses' land use rental costs for 2011 and 2012.

Enterprises conducting manufacturing businesses will enjoy a 50-per-cent reduction in rentals for leased land which is paid annually according to calculations under Decree No 121/2010/ND-CP.

The land rent charge is reduced only when such entities (i) have the proper and lawful use of the leased land, and (ii) have been subject to statutory increases in land rent charges at least twice in 2010. However, the reduced land rent charge cannot be lower than the land rent charge in 2010.

If the reduced charge remains twice the 2010 charge or more, the payable charge will be reduced to twice the 2010 charge. The new decision takes effect immediately.

New regulations on digital signature certification

The government issued Decree No 106/2011/ND-CP on November 23 amending Decree No 26/2007/ND-CP of February 2007, issued to carry out provisions of the Law on Electronic Transactions on digital signatures and digital signature certification services.

Under Decree No 106, the public digital signature is the digital signature created by subscribers using digital certificates issued by an organisation providing digital signature certification services. A specialised digital signature is a digital signature created by the subscriber under the digital certificate.

Under Decree No 106, the organisations providing digital signature certification services are only required to assure that technical, managerial, operating, security and customer service staff are qualified and have never been condemned. They are no longer required to have specialised legal knowledge. Decree No 106 takes effect on February 1, 2012.

Exemptions granted from environmental taxes

The Ministry of Finance issued Circular No 152/2011/TT-BTC on November 11, providing regulations under the Law on the Environmental Protection Tax and government Decree No 67/2011/ND-CP of August 8, 2011. Under Circular No 152, goods which are not defined in Article 3 of the Law on the Environmental Protection Tax, Article 2 of Decree No 67 and Article 1 of Circular 152 are not subject to environmental protection taxes, provided that (i) such goods are transported from the exporting country to importing country through a border gate of Vietnam and transited through the border gate (including goods brought into bonded warehouses) without undergoing import procedures into Vietnam or export procedures out of Vietnam; or (ii) such goods are transited through a border gate of Vietnam on the basis of the agreements signed between the government of Vietnam and foreign governments or between agencies or representatives authorised by the government of Vietnam and foreign governments under provisions of law; or (iii) such goods temporarily imported for re-export are within the time limit as prescribed by law; or (iv) such goods are exported abroad by manufacturers or processors or their licensees, except for organisations, households and individuals purchasing goods subject to environmental tax in order to export them.

Organisations and individuals producing and trading in petroleum products will not have to declare or pay environmental protection taxes for gasoline which was declared prior to January 1, 2012.

The circular takes effect on January 1 and replaces Circular No 06/2001/TT-BTC of January 17, 2001; Circular No 63/2001/TT-BTC of August 09, 2001; Circular No 70/2002/ TT-BTC of August 19, 2002; and provisions on tax management of fuel in Circular No 28/2011/TT-BTC of February 28, 2011.

Source: Dztimes

FDI flow to Vietnam real estate market at record low

2011-12-01T18:55:00.000+07:00

Total FDI capital for Vietnam real estate market reached $464 million in the first 11 months of 2011, ranking the fourth among sectors in terms of FDI attraction, the Foreign Investment Department of Ministry of Planning and Investment reported.

Thus, Vietnam real estate market has not created great attraction with foreign investors, according to Vietnam Economic Forum.

The reduction of FDI flow to the real estate is attributed to financial difficulties of foreign investors and big funds, causing barriers for uncompleted projects. In addition, the market is handling with many problems such as liquidity and transparency, sharp decline in prices.

Up to $23 billion of FDI was invested in Vietnam real estate market in 2008, $21.48 billion in 2009 and $6.8 billion in 2010.

Source: Vietbiz24

Property market remains dull despite credit easing

2011-11-29T09:19:00.000+07:00

The central bank’s recent move to partially loosen credit for the property sector has not worked as well as expected, sparking concern the market would worsen next year.

The central bank governor, Nguyen Van Binh, told Vietnam news agency in an interview that strict controls on lending would go into next year to help stabilize the macro economy. However, lender banks will consider borrowers in non-productive sectors such as property, securities and consumption, but with prudence.

The realty market plays an important role in driving the nation’s social and economic development, but it should be strictly supervised to prevent a bubble burst. Binh said.

Property developers have had a lukewarm response to the slightly relaxed credit policy towards the real estate sector since the overall policy for next year is still biased against easy credit.

Le Hoang Chau, chairman of the HCM City Real Estate Association (Horea), described the central bank move as a mild realty market confidence booster, saying it would not help the market turn around.

In reality, the measured credit loosening has left almost no impact on the market. Borrowers have not been able to take out loans at high interest rates while no projects could be finished by January 1 as requested by the central bank.

Businesses in the sector pointed out that if projects have just one month to go, they must be in the final stages of handing over homes to buyers at the moment, meaning that they no longer need to borrow.

Chau said the requirement that only salaried people can gain access to home loans effectively prevented owners of family-run businesses from such loans though they might have more stable incomes than the salaried.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Co., attributed the sluggish market to credit tightening and poor liquidity in the market. “Banks may give out small loans but the ailing realty market cannot resurrect overnight due to dampened buyer demand,” Duc said.

Moreover, Duc noted, companies were also to blame as they had supplied the market with homes that were more expensive than what buyers could afford.

He proposed extending the credit loosening till end-2012, helping the companies that have finished 60%-70% of their projects or lending to projects with a home selling price of below 1 billion dong per unit.

Chau of Horea proposed the central bank adopt a policy permitting the first-time buyer to access easy bank loans and work out a road map to bring lending rates down.

The tough market conditions have led realty prices to dip, offering an opportunity for more people to own a home and financially capable property developers to capitalize on this.

(Source: Saigon Times.)

Banks, developers laud looser credit policy

2011-11-29T09:16:00.000+07:00

Banks and property developers are heaving a sigh of relief after the State Bank of Vietnam eased restrictions on lending to the real-estate and some other non-production sectors.

A recent central bank decision requires lenders to ensure credit at reasonable interest rates to secure social welfare and stabilise the economy.

It lifts a virtual ban on lending to property and housing projects that the SBV had imposed last March by mandating that commercial banks' outstanding loans to non-production sectors should not exceed 16 per cent of total loans by year-end.

But the figure remained stubbornly stuck at above 16 per cent since property developers were unable to repay their loans due to the market slump. The new decision removes the bulk of the property sector from the list of non-production sectors.

Banks can again freely lend to developers building apartments for low-income people and workers in industrial, economic and processing zones.

Another category they can lend to is housing projects that will be completed before 2012. Besides, individuals can obtain mortgages based on their wages to buy or upgrade houses.

Analysts say this is mainly aimed at enabling banks to achieve the 16 per cent ratio.

A general director of a joint stock bank, who does not want to be named, says his bank's ratio is now just 8-9 per cent, "more than 10 percentage points lower [following the SBV's decision]".

Analysts also think the move will breathe life into the real estate market which went into a downward spiral, especially after credit was tightened and investments flowed into gold and other assets.

They say most loans to property developers were given in 2008-10, and the developers are mostly contracted to hand over apartments to buyers in early 2012.

Thus, many of these projects will be eligible for more loans, while the creditor banks will be able to recover their debts from the developers.

Hoang Anh Tuan, general director of property developer Tac Dat Tac Vang Company, says the new decision will allow people actually in need of housing to get loans.

"This is of great significance for developers like us because it will help us sell our products easier."

Tran Minh Hoang, chairman of another developer, Vinaland, says since most people who want to buy or upgrade housing depend on bank loans, loosening credit will help improve market liquidity.

The biggest hurdle for the market so far has been liquidity and not prices, he explains, since many developers have been ready to sell at a loss but still found no takers.

Once the real estate market recovers, related sectors such as construction and construction materials will also see a recovery, he says.

However, other analysts say that individuals will not benefit much since the mortgage amount depends on income and very few people have high enough wages.

Le Tham Duong from the Banking University says this also means the market liquidity will not improve as claimed.

Most banks have no liquidity while interest rates are still too high for both enterprises and individuals, he points out.

Banks should lend to property developments that are in actual need of funds and offer mortgages at reasonable interest rates if market liquidity is to improve, he says.

(Sources: Vietnam News.)

Real estate market in Binh Duong province attractive thanks to cheap prices

2011-11-28T09:31:00.000+07:00

A series of property projects in Binh Duong province still are very attractive thanks to advantage of low prices, the Dau Tu (Vietnam Investment Review) reported.

Last weekend, Becamex IJC Company and Tac Dat Tac Vang Joint Stock Co in turn announced the fifth selling phase of Green River project in My Phuoc 4 Dist, Binh Duong. The event drew the participation of hundreds of investors and after one week, customers registered to buy 100 foundations of land.

Hoang Anh Tuan, General Director of Tac Dat Tac Vang JSC (official distributor of the project) said that these were the last as well as the greatest products of Green River. “The more interesting thing is that all products were offered at suitable prices, averaging at about 2 million dong per square meter. Meanwhile, the land was registered with red books, and invested by the prestigious company Becamex IJC”, Mr Tuan said, adding that synchronically-invested infrastructure was also the factor making customers feel secured to select products at Green River project.

Currently, infrastructure works in Green River project, such as Thu Dau Mot University and a centre lake have been built. Most lately, Becamex IJC announced it would construct a trade centre namely Luxurious Shopping Centre of the project.

Apart from Green River, foundation land projects in Binh Duong also are attracting great attention of customers. According to the Vietnam Investment Review, these projects have soft prices ranging between 1.7 million and 2.5 million dong per square meter. Particularly, in the first day when Becamex IJC offered 100 lots of land foundation of IJC Commercial Town (My Phuoc Dist, Binh Duong province), 85% of these products were registered to buy.

Similarly, investors are interested in Kim Oanh Real Estate Joint Stock Co’s City Garden project in Binh Duong province.

Low prices and developed infrastructure are important factors for which investors believe in Binh Duong real estate market. The municipal governance is speeding up investment in new city project. The presence of more economic and industrial zones is expected to attract over 15,000 local and foreign experts, and hundreds of thousand of labourers.

Moreover, Becamex IDC said it would build a highway along with Binh Duong Boulevard. The highway is 31.5 kilometres long, scheduled to be started by 2012. The project will be broken into 2 phases with total investment capital of more than $830 million.

(Source: Vietbiz24.)

KDH officially introduces Hoja Villa project to public

2011-11-28T09:29:00.001+07:00

Khang Dien Housing Investment and Trading Joint Stock Co (KDH) has officially introduced the Hoja Villa project to public.

The project is situated in the current residential quarter in Phuoc Long B Ward, Dist 9, HCM City, near other high-class complex such as The Garland (VinaCapital), Riviera Cove (Keppel Land).

Hoja Villa project has offering price of 3.7 billion dong (VAT included) for a semi-detached villa with garden.

(Source: Vietbiz24.)

Real estate investment fund must invest at least 65pct of NAV in core sector

2011-11-28T09:27:00.000+07:00

Real estate investment fund must invest at least 65 percent and maximum 100 percent of its net asset value (NAV) in realty sector, the local online newspaper Saigon Economic Times said, citing the State Securities Commission of Vietnam (SSC)'s draft guidance circular announced on November 23 on establishment and management of securities investment funds to seek opinion from market members.

The draft also provides specific guidance for the operation of close-ended fund, securities investment company and fund management company.

The draft circular stipulates the capital mobilisation, establishment as well as management for securities investment funds, including close-ended fund, member fund, real estate investment fund, public securities investment company, individual securities investment company, securities and real estate investment company and related activities of the fund management company, depository bank and custodial bank.

However, the establishment and management of open-ended fund have not been mentioned in this draft yet. Earlier, in the roadmap of implementing measures to stimulate the Vietnam's stock market, SSC said the circular on open-ended fund is expected to be issued in the fourth quarter 2011.

Due to the regulations on establishment of domestic real estate investment fund have not been completed yet, currently most real estate investment funds belong to foreign funds such as: Saigon Asset Management; Vinacapital; Dragon Capital and Indochina Capital.

If the model of this fund is formed successfully, real estate enterprises will not have to depend too much on capital sources of banks, particularly in the context of high interest rates currently.

According to the draft, real estate investment fund is allowed to invest minimum 65 percent and maximum 100 percent of its NAV on property projects. Real estate investment fund is disallowed to lend or guarantee any loans or borrow more than 5 percent of the fund's NAV at the time of borrowing.

Property must be held within a minimum of two years from date of purchase, except for cases of being forced to sell assets as required by law or by decision of the investor board or the representative board of the fund.

Property investment fund is also allowed to invest maximum 35 percent of its NAV in money and money-equivalent instruments, valuable papers, transfer instruments according to laws on banking, listed shares, deposited shares, registered stocks, government bonds or government-guaranteed bonds.

Source: Vietbiz24

Vietnam’s property price to decline further

2011-11-28T09:26:00.000+07:00

Many high-class condos projects had to reduce rental to $20 per square meter but renters still want to negotiate lower prices, the Tuoi Tre Online reported.

Property prices in Vietnam market have declined by 20-30% sharply so far, hence a lot of firms had to sell off projects to repay bank debts, but the prices of high-class apartments will be much lower.

The prediction was said by Marc Townsend—Managing Director of CB Richard Ellis (Vietnam) global research and consulting firm at the international conference themed “Credit Crunch: Where from Here for the Vietnam Real Estate Market?” on November 23 in HCM City hosted by DFDL Mekong law firm in corporation with CBRE and Standard Chartered Bank.

Regarding the office-for-lease segment, Marc Townsend spoke, the thing what renters are paying attention is competitive prices and it is right time for companies to move headquarters and offices from outskirts such as Dist 7, Tan Binh Dist to centre districts in HCM City.

In order to maintain and attract, property investors need to improve current buildings and increase utilities of buildings such as basements, decoration, energy saving, and seek opportunities to re-negotiate rentals.

CRBE Vietnam forecasted the Vietnam real estate market will remain gloomy 2012 in all segments. Only the segment of properties for education, international kindergartens, healthcare, and beauty, eating and drinking will continue generating good performance.

Sharing the point of view, Michael Kokalari—Chief of Kimeng Securities Co’s information research department, through talks with foreign investors in Vietnam, said that the investors from US, Japan, Europe paid a great attention to consumer beheaviors of young mid-class group in Asia generally and Vietnam particularly.

In the recent past, these foreign investors bought back stocks of Vietnam’s consumer industry companies namely Masan, Huong Thuy based on the development potential of this field, he noted.

Michael Kokalari assessed, despite the property prices declined 20-30% as announced lately by PetroLand Co, Vietnam real estate market has not gone to its equibrilium point. Many firms who were facing difficulties in liquidity, bank debts are not desperate because it is normal as debts increased in the crisis period.

David Tran, Vice Chair cum Director of the Asian Real Estate Association of America (AREAA) in US stated at the conference that the Vietnam real estate market is losing liquidity, so investors are seeking money sources outside the banking system, and overseas remittance is the way-out for property projects. If Vietnam continues improving legislative environment, removing barriers in law on contracts, taxation policies for foreigners, the realty market will receive a quite high volume of inward remittances from 4.5 million Vietnamese overseas.

Meanwhile, according to Ta Chau—Director of DFDL Mekong tax and law consulting firm, she was so excited to changes in Vietnam’s laws in 2012.

Ministry of Finance proposed to open Real Estate Investment Trust funds (REITs) which are expected to create a strong movement in the market in following years. Through REITs, creating an easy capital divestment regime whereby investors are able to withdraw capital if necessary, she remarked.

Experts also recommended 16 changes in property-related laws and regulations, including Law on Land, Law on Investment, and Law on Enterprises. These changes may create negative moves in Vietnam in next 5 years.

The Vietnam real estate market in 2012 is determined by the government decisions, she confirmed.

(Source: Vietbiz24.)

Funds allowed investing 65% of NAV in real estate

2011-11-28T09:23:00.000+07:00

Real estate investment funds are allowed to invest at least 65% and maximum 100% of their Net Asset Value (NAV) in realty projects, the Saigon Economic Times reported, citing the draft guidance circular on forming and managing securities investment funds.

Property investment funds are also permitted to invest maximum 35% of their NAV in money and money-equivalent instruments, valuable papers, transfer instruments according to laws on banking, listed securities, registered stocks, government bonds or government-guaranteed bonds.

Under the draft circular, these funds are disallowed to lend or underwrite any loan, or borrow more than 5% of their total assets at the borrowing time.

In addition, properties must be held in at least 2 years from the purchase time, except the cases that properties are forced to be sold in line with legislative requirements or decisions of investors’ meeting or representative boards of funds.

(Source: Vietbiz24)

Real estate developers race to build skyscrapers

2011-11-23T22:24:00.000+07:00

Thirty-seven, sixty-eight, seventy, even 102 storeys – in Hanoi and Ho Chi Minh City, bigger and bigger buildings are reshaping the skyline.

Most skyscraper projects have been developed by heavyweights in Vietnam’s real estate sector. In the south, everyone’s heard about Bitexco’s 68 storey ‘Bup Sen’ (Lotus) Financial Tower in Ho Chi Minh City. It’s been under construction since 2005 and will be completed at last this year. The Bup Sen tower will dethrone the 37 storey Saigon Pearl and the 35 storey the VCB – Bonday – Ben Thanh Tower and Saigon Trade Centre buildings as Vietnam’s highest structure.

However, the Bup Sen Tower won’t keep its title for long. By 2012, the Keangnam Group’s Hanoi Landmark Tower will top out at 70 storeys. The South Korean firm is investing $1.05 billion in the skyscraper on Pham Van Dong Street in Cau Giay District.

The Landmark Tower could lose bragging rights in turn to another building planned for Hanoi. Ocean Group and PetroVietnam signed an agreement on May 7 to build the 102 storey PVN Tower at a cost of $1 billion.

It’s often heard that building skycrapers will give Vietnam more ‘international stature’ and attract more investors and tourists to Vietnam. In a number of other rising nations, skyscrapers have become icons. Dubai has its Burj Khalifa tower (168 storeys), a building in Taiwan is 101 storeys and Malaysia has the 88 storey Petronas twin tower, for example.

According to Johan Nyvene, General Director of the HCM City Securities Company, only availability of capital and investors’ business capability limits the height of skyscrapers. Real estate developers see great potential for such development in Vietnam and they are rushing to build office complexes, hotels and retail premises which will well serve clients in the next few years.

According to Bitexco, the biggest profit an investor can gain from building skyscrapers is prestige. Dinh Dung, a Bitexco executive, said that Bitexco Financial Tower’s eye-catching design pushed up construction expenses by 30 percent. And it’s worth it, he says: “the thing that we want is to position Bitexco’s brand in Vietnam, and Vietnam’s brand in the world.”

PetroVietnam Chairman Dinh La Thang expects to see considerably more development of skyscrapers in Vietnam, saying that Vietnamese enterprises have opportunities and capability to implement big projects.

“I think that enterprises must make heavy investment in design consultancy, project management, and especially in technology and workforce, so that they can undertake big projects,” Thang explains.

Meanwhile, some other real estate executives consider skyscraper building ‘just a risky game for the big guys.’ Dang Van Quang from John Lang LaSalle Vietnam warns that investors in such big project will only recover their investment capital only after a very long time. A normal real estate project, he says, pays back its investors in seven to eight years, whereas the investors of 60-70 storey buildings will only be able to recover capital after 15 years.

Vietnam’s new skyscrapers are mostly located outside the center of the cities, build with one eye on the urban development plan. Because the office leasing market segment has not been fully recovered, and only lower storeys can be used for retail premises, the decision to move ahead requires a measure of boldness and faith in the real estate market of the future.

(Source: VnExpress | VietNamNet.)

Vietnam real estate market continues to rebound

2011-11-23T22:22:00.000+07:00

Hanoi and HCM City are predicted to have an abundant housing supply with around 90,000 apartments being offered for sale and more than 80,000 finished apartments.

A group of experts has reported Deputy Prime Minister Hoang Trung Hai- Head of the Central Steering Committee for Housing Policy and Real Estate, on the current market which, the group said, will continue to rebound in the near future as demand for houses, business space and offices for medium, and small sized enterprises is on the rise in Hanoi and HCM City.

The real estate market remains a magnet for investors, especially for the surrounding areas of HCM City and Hanoi such as Dong Nai, Binh Duong, Can Tho, Vinh Phuc and Hung Yen.

The expert group has also proposed building a financial mechanism for housing development and the real estate market.

(Source: VOV News.)

Hanoi’s biggest shopping mall to open in third quarter

2011-11-22T21:31:00.004+07:00

Grand Plaza – an international standard shopping centre – will open in the third quarter of this year on Tran Duy Hung street in Hanoi's Cau Giay district, according to Pham Cuong, the property director of IDJ Asset Management Joint Stock Co.

Located in the "golden" land of Hanoi, Grand Plaza, with a total area of nearly 16,000sq.m will be the largest high-end shopping centre in the city and provide a wealth of shopping options for consumers.

The US$34-million centre is being developed and managed by the International Financial Investment and Enterprise Development Joint Stock Company (IDJ Financial) and IDJ Asset.

The five-storey centre is part of the Charmvit Grand Plaza, a US$200 million international standard office and hotel complex developed by the Republic of Korea's Charmvit Group with total floor area of nearly 120,000sq.m.

To date, more than 80 percent of the centre's retail space has been filled with representatives of international and local cosmetic, fashion and jewellery brands.

(Source: VNA.)

RICS comes offering property training services

2011-11-22T21:30:00.000+07:00

The Royal Institution of Chartered Surveyors (RICS) says it will open a representative office in HCM City in the coming weeks to facilitate its first steps into the local property market by offering training courses for professional property services here in the country.

Max Crofts, global president of RICS, told reporters at a news briefing held at the Intercontinental Hotel in downtown HCM City on Thursday that the London-based organization came to Vietnam not only to support its members working in the country, but also to help train Vietnamese staff to become qualified experts to serve the local property market in the years to come.

Crofts said RICS would work with local organizations for training courses involving land, valuation and construction among others. Learners will have three years to cover different degree courses to become professional members of the organization.

He said professionalism will contribute to improving the transparency of the emerging property market in Vietnam.

RICS said the global real estate industry is focusing its attention on new investment opportunities in Asian countries with signs of economic recovery.

According to analysts, the Asian property market is starting to pick up, especially in developing Southeast Asian countries where land is at a premium, offering investors great opportunities to participate in development projects with the potential for high returns.

“The current trends have ignited an interest in the property market in Vietnam, one of the world’s fastest growing countries with strengthening international links,” said Crofts, adding that property prices in Vietnam were rebounding as the global economic recovery continued.

(Source: Saigon Times Daily.)