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| Real estate market slumps |
| 11-MAR-2010 Intellasia | Vietnamnews page 6 |
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| 11 Mar, 2010 - 7:00:00 AM |
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Nam Ngoi Sao Viet Joint Stock Co chairman Nguyen Ngoc Duong spoke with Dien Dan Doanh Nghiep (Business Forum) online about the real estate market.
It seems as if the consumption index is increasing while real estate prices are decreasing. What is your prediction for the real estate market in the near future?
An increase in the consumption index was previously predicted but few people paid attention. The current increase is influencing the real estate market and will continue to do so in the near future. First, in the real estate market we believe that if the consumption index increases by 1,000 dong, then prices in the real estate market will reduce by billions of dong. At this time, some commodities have increased in price by 20-30 percent. Accordingly, real estate prices will likely reduce, especially those in the medium price range, where most customers buy.
Second, the banks will continue to offer promotions to attract capital. It also means that the banks need money and they will reduce their lending for real estate investments. Anyone in the real estate market is aware of these two points.
Third, investors are being forced to sell real estate that they have been holding on to for the last two years at promotional prices in the hopes of breaking even.
From the initial signals so far this year, I am afraid that the picture of the real estate market is not bright. This year home buyers will benefit while speculators will not.
What should real estate enterprises do this year?
They should find the right products to fit the market. They should find a market solution and act as the medium between buyers and sellers. Real estate businesses should not concentrate on one type of product. Also, they are faced with inflation so they should make efforts to understand their customers' needs in order to serve them better.
Enterprises should know who their customers are and what they can afford. At this time only two types of customers can buy houses: first are the speculators and second are people with high incomes, in the range of $5,000-10,000 per month. Both of these types of customers tend to seek high quality real estate.
The enterprises should watch the market carefully and try to find the right customers for their products. Enterprises should develop their staff, especially the sellers, by giving them more training for their long-term development.
At this time, not everyone can be a real estate seller. If the enterprises offer products that buyers did not want to buy, the products will soon be considered bad products. In the Vietnamese culture, people won't buy something that others ignore. Therefore, enterprises should develop a long-term strategy with increasing numbers of professional sellers if they want to develop in the market.
But enterprises and investors seem to focus on low-income buyers. What do you think about this situation?
Few developers are involved in providing for this market and the purchasing capacity is low.
Currently, the real estate market is quite silent and earning little profit. Real estate investors need projects with a fast turn around in order to get their capital back. Most of the potential buyers now are actually the speculators because they have the money.
The social housing project is focused on low-income buyers. So, even though there is a policy to build and sell houses to low-income people, the enterprises will try to sell their houses to customers they target. A programme to build houses for low-income people will only work if the State allows buyers to purchase the homes on a long-term hire-to-own contract.
The banks have started to reduce lending for real estate investments. Will this disturb the market?
In fact, Vietnamese enterprises currently hold a lot of land use rights but they lack the capital to construct their buildings. Even low-income or social housing projects are dependant on the State budget for financing at this time. Financing is the most difficult issue for any real estate enterprise in Vietnam right now.
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