| Real estate market report (Nov 7th - Nov 13th) The scenarios for the property market |
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(Listed Nov 18, 2008) |
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 Last week, VinaCapital, a leading asset management and financial services group gave a judgment that the current property market still has certain difficulties. However, within the next 6-12 months, this market will recover. This group has also said that it is considered a suitable stage for seeking for opportunities to pour the capital into effective projects.
“Cold market” is also an opportunity
Besides Vietnam Opportunity Fund (VOF) with 30% of the capital pouring in real estate and a fund specializing in real estate investment named VinaLand, VinaCapital is now preparing to launch a new real estate investment fund with the total mobilized capital about USD400 million. This fund is scheduled for debut in early 2009 to welcome investment opportunities in the Vietnam property market focusing on main aspects such as hotels, apartment buildings, commercial centers, offices for lease, etc. But different from VinaLand, this new fund isn’t listed on the stock exchange floor.
David Blackhall, VinaCapital's deputy managing director has told that foreign investors are very eager to participate in investing in the Vietnam property market under the form of unlisted investment fund more than listed one like VinaLand.
According to Mr. David’s assessment, it’s difficult for the Vietnam property market to eliminate all difficulties in the next year; however, by late 2009, the properties will re-grow because the demand of this market is very huge. Many projects have recently been delayed because the investors lack capitals resulting from banks’ lending restrictions. This is an opportunity for the investors who intend to invest in the Vietnam property market. However, they must have mid- and long-term strategies.
In the property field, the segments of tourism and hotels of Vietnam are specially interested by foreign investors. Because they think that the property supply hasn’t met the market’s demand is increasing. Moreover, commercial and shopping centers are also in their eyesight.
Do Thi Loan, HCM City Real Estate Association’s General Secretary has told that at present, there are some investors wishing to invest in Vietnam’s commercial centers because they realize that the commercial centers’ development opportunities are very big. Meanwhile, a large city like HCM City hasn’t had any worthy center yet. Furthermore, investment in hotels and resorts has been paid much attention by many investors.
Kang Han Soo, chief representative of Korean Housing Development Company in Vietnam has said that his company and some other Korean investors are seeking investment opportunities in housing market for low-income people in Vietnam. “As I know, the housing market in Vietnam develops basing on two supply sources: from private and state-owned companies. The state-owned companies are trying to build houses for low-income people (including beneficiaries of social welfare, civil servants, etc) but the number of houses is still limited. The private companies usually develop commercial houses, hi-end apartment buildings to mainly serve high-income people. Therefore, for the past time, the housing market in Vietnam didn’t meet housing demand of the low-income people,” said he.
Which scenarios are for housing and land markets?
If banks continue to tighten credits, the property prices will drop over 70% compared to the early 2008; the market will stand and pass if the credits are loosened, a market and economy expert affirms. Le Hoang Chau, chairman of HCM City Real Estate Association has said that in many current market segments, housing and land prices have fallen 40%-60% on average, even down to 70% compared to the early 2008’s highest price. “If the banks don’t continue to offer customers lending money to buy houses loan extensions but tightening more and turning them into outstanding debts, it’s certain that the rate 70% will be deeply exploited because many people are forced to “sell out the properties” to “avoid being squeezed debts”, says Chau.
However, according to many experts, loosening “the purse-strings” for the investors is not enough to “rescue” the market. To quickly recover the market, it’s important to have stimulative policy to make a direct impact on the customers.
According to statistics from the VietRees market research company, in October 2008, the property market has no transaction due to the fact that the buyers continue to wait for next price drop. Ho Huu Hanh, Director of HCM City Branch of the State Bank of Vietnam has told that many people are worried about comprehensive property release within the next 2-3 months, which causes the market have no transaction.
In response to DiaOcOnline, Pham Sy Liem, director of the Urban and Infrastructure Development Research Institute under Ministry of Construction, thinks that to wake the market up at this time, the government must give people having real housing demand an effective credit policy. Besides supporting low-income people to buy or to improve houses via preferential credits, it’s necessary to establish state-owned funds to build the houses for employees. As to Mr. Liem, previous projects are flocked into houses for high-income people and luxurious villas. Prices of these houses are some times as high as the normal ones. Yet, although the prices are now falling, even down to by 50%, there is no buyer. On the contrary, houses for the low-income people are rare. “To overcome the difficulties, realty businesses should shift to housing segment for the low-income and stable people,” Liem suggests.
Source: Le Dinh - DiaOcOnline.vn |
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