Property deals plummet
Source: 07-MAY-2008 Intellasia | The Saigon Times Daily page 2
May 7, 2008 - 7:00:00 AM Real estate transactions in HCM City are experiencing stagnancy in the wake of the Government's policy to tighten bank loans for real estate investors and the fact that realty firms find it hard to borrow bank loans for their deals.

Figures of CB Richard Ellis show a square meter of luxury apartment projects is now US$100 lower than previous week, selling for US$2,300-2,400 at The Vista in District 2, and US$1,300-1,800 at BMC Hung Long and Phu Hoang Anh in District 7.

The transaction of land plots has also been slowed compared to the time before Tet (Lunar New Year) even at good residential areas such as Saigon in District 9, Phu Loi-Binh Dien in District 8, East Thu Thiem in District 2, Thoi An in District 12. A square meter at these areas is now priced at 8-12 million dong, or down 12%.

However, real estate experts said the stagnancy was just seen at high-class apartments, offices for lease, and land plots in new urban towns. They attributed the temporarily freezing situation to the restricted bank loans for real estate and trading among speculators.

Things turn out to be different for the real estate companies which have received financial pledges from banks. Reality shows Hoang Anh Gia Lai Land or Dat Xanh are moving ahead with their new projects.

Hoang Anh Gia Lai Land is on process to develop 22,000 apartments nationwide while Vincom Joint-Stock Co. is pressing ahead with its trade, office and hotel complex in HCM City's District 1. Vinaland is ready to break ground for a 500-luxury apartment project in District 7.

The demand for apartments whose prices are from 400 million dong to less than 1 billion dong is on the rise. Actually, customers have to pay 15-20% higher for the land plots at sought -after areas.

Tran Kim Chung of the Central Institute for Economics Management explained buyers now can pay for small-value deals due to the narrower access to bank loans.

Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, shared Chung's views and said that despite the decline, prices of houses and land plots remained relatively high compared to the country's economic development level, mostly supported by speculation and the huge investment of domestic and international real estate corporations in real estate projects.

A Vinaland expert said few investors now held houses and land plots in anticipation for higher prices. Speculators are mainly small investors who take risk at some projects including An Phu-Anh Khanh, Thai An, Hung Phu and Hung Long.

Experts predict the real estate market will get bustling again when the amended Decree 90 is passed as it allows a number of overseas Vietnamese (VietKieu) and foreigners to buy houses and land plots in Vietnam.

Moreover, foreign investors are optimistic about Vietnam's real estate market as much investment is expected to go into tourism, offices for lease, hotels and luxury apartments. This may result in an increase in land value.

The Ministry of Planning and Investment estimated that more than US$4.6 billion, or 89.9% of the registered investment capital in the first quarter of this year, is pooled int9 the service sector, and the real estate and hotel projects took the lion's share. HCM City led the country, with four projects of this kind that are valued at US$2.08 billion or 40.3% of the total capital in the period.