Real estate signals recovery - Real estate signals recovery - Website Ho Chi Minh City
The Vietnamese property market has shown signs of recovery after a long period of stagnation, heard a symposium held yesterday in HCM City.
Speaking at the "Viet Nam Real Estate Symposium, 20 years looking back and two years looking forward" symposium", Nguyen Tran Nam, deputy minister of Construction, said that property prices had not increased and were now selling at reasonable prices, especially in the mid-range housing segment.
As for the high-end market, the prices of property projects in the western area of Ha Noi fell dramatically, by 60 per cent from 2011-2013. For the first half of the year, prices remained stable, with some project prices increasing by 1 – 2 per cent only.
The number of transactions had gone up as well, he said. Around 5,100 transactions were completed in Ha Noi in the first seven months of the year, or double the figure over the same period last year.
In HCM City, there were 4,500 transactions in the first seven months, a rise of 30 per cent compared to the same period last year. As of August 20, the total value of real estate inventory was VND82.295 trillion (US$3.9 billion), a drop of 46.254 trillion ($2.2 billion) compared to the first quarter of last year. From December 31, 2013 to June 30, 2014, the total credit balance for property had increased by 7.7 per cent to reach VND282.2 trillion ($13.3 billion). At least 20 per cent of the government's VND30 trillion $1.4 billion) housing credit package had been disbursed.
The property market has attracted a large amount of foreign direct investment (FDI). There are a total of 427 FDI property projects in the country, with total registered capital of $51 billion, ranking second after the processing industry.
Foreign direct investment in the real estate market accounts for 21 per cent of total foreign direct investment in Viet Nam. According to Savills Viet Nam, the office-for-lease segment grew by 1.6 to 5 per cent in most big cities in Asia Pacific, including Ha Noi and HCM City, in the first half of the year.
Troy Griffiths, deputy managing director of Savills Viet Nam, said Viet Nam's property leasing prices were competitive compared to other countries in the region, especially in the hotel, retail and serviced apartment segments.
Marc Townsend, managing director of CBRE Viet Nam, said that HCM City and Ha Noi were still the top target markets for property retailers.
Experts who spoke at the meeting said that high-end projects of a large scale were still the primary focus of developers.
However, only 20 per cent of consumers can afford property in this segment, they said. Also, many property investors have to rely on short-term loans with high interest rates, while many small businesses that have weak financial capacity continue to take part in the market.
The country now has 15,316 property businesses. Of that number, 8,603 businesses have chartered capital of less than VND20 billion ($944,000).
At the meeting, many foreign investors expressed concerns about lack of transparency and complicated administrative procedures in the real estate market.
They said these a more open investment environment should be created.
To resolve these issues, the Vietnamese Government has issued many policies and incentives to ensure sustainable development of the market.
These include measures to control supply-demand balance; review and evaluation of projects; resolution of non-performing loans; and more loans to customers so they can buy houses.
The Ministry of Construction has also advised the Government to amend real estate business laws and housing laws with content that provides more favourable conditions to foreign businesses and foreigners to invest in real estate as well as rent and lease houses and land in Viet Nam.
The symposium, held by the Australia Chamber of Commerce in Viet Nam (Auscham) aimed to discuss the latest development in Viet Nam's property sector, market insights, advice on attracting local and foreign investors, an upgrade on Law and Tax changes, and networking opportunities with key parties and well-known figures in the real estate industry.