Archive | June, 2008

Hanoi – West Lake – Sai Dong

26 Jun

Sai Dong 3
Sai Dong 4

West Lake

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Red River City

26 Jun
Investors of Song Hong City project, otherwise known as the Red River project, received a crushing blow last week after the government officially ordered the project to another site.

The decision was made because of fears that the project would be detrimental to the the Red River dike be system.

The Hanoi People’s Committee will responsible for helping the investor to find another location, which has the…








Reported by Kiva.Dang

Royal Garden – Distric 4 – Hochiminh City

25 Jun











Images: E8Club

On the way back to real value

23 Jun
Vietnam Real Estate – The fall in property prices has continued over the past three weeks as lackluster demand has shown no signs of improvement. In some places in HCMC, prices have declined over 60% while the market in and around Hanoi has seen a drop of 15-25% from the fourth quarter last year.

Experts have forecast a further fall over the next two months. But the market is expected to shy from bubble prices and return to where real value for property is. A market recovery is likely by the end of 2009 or early 2010.

A report by HCMC-based real estate firm Vinaland says that over the past four months, condo prices in some projects in the city have plummeted by half. Take the Him Lam-Nam Khanh project in District 8 for example. Condos in this project are now offered at VND12 million per square meter, down from VND25-26 million in February.

In recent months, the real estate market has grown sluggish as a result of the monetary tightening policy and anxiety about the strong volatility of the dong/dollar exchange rate.

The market, especially in Hanoi, HCMC and neighboring areas, ran wild last year and in the first quarter of this year, with prices shooting up to sky-high levels. Bulls rushed to buy land and apartments in the hopes of making quick bucks, thus leading to bubble prices.

However, since March the markets in Hanoi, HCMC and some major cities, have taken a nosedive. The number of offers has kept rising but there have been few successful transactions.

Figures from the Ministry of Construction show that land and housing prices have slid by around 20-40%, or even 40-60%. This corresponds to the central Government’s measures to curb inflation.

In the meantime, real estate developers have complained that they are on the verge of bankruptcy but have never mentioned the big profit they earned during the booming time of the market.

The HCMC Real Estate Association (HoREA) has written to the city government and ministries seeking permission for member real estate developers to mobilize capital from buyers before the completion of a project’s foundation. Association members say they have difficulty developing their projects due to lack of access to bank loans. However, the booming period saw many projects being launched and their apartments are still selling well.

Prices are actually on the decrease but remain higher than what were originally offered by investors. Prices of apartments of different qualities in HCMC are still double the original levels.

HCMC Institute for Economic Research director Tran Du Lich has described the fall in land and condo prices as a positive development, saying the prices skyrocketed in the past.

Deputy Minister of Construction Nguyen Tran Nam told reporters in HCMC in end-May that the profit currently earned by real estate firms remained big despite the market slump. “Don’t be worried about them,” he says.

In reality, a lot of investors are injecting money in new property projects and this will put pressure on existing developers to offer reasonable prices if they want their projects to sell well.

Commenting on Vietnam’s property market, Christophe Fossick, managing director of the real estate services firm Jones Lang Lasalle Vietnam for Southeast Asia, says the market is in the febrifuge rather than frozen state.

According to the Jones Lang Lasalle, the apartment market segment has seen a price fall of 15-20% from the fourth quarter of last year. However, the company forecast that it will recover in line with the national economy by the end of 2009 or early 2010 and the enforcement of new real estate policies, such as allowing foreign people to own apartments in Vietnam.

While local companies are complaining about the market, foreign investors are searching for a slice of the pie. Many big-ticket property projects have been licensed in recent months, including a US$1.6-billion project of Starbay Holdings on Phu Quoc Island off the coast of Kien Giang Province, a US$4.2-billion Ho Tram Strip project of Canada’s ACDL in the southern coast province of Ba Ria-Vung Tau, and a US$ 1.29-billion complex of the U.S.-based Good Choice Group, national groups have decided to put their money into real estate projects in HCMC, Hanoi and other major economic centers in the country, such as Ha Tay, Danang, Binh Duong and Dong Nai.

A real estate expert of HoREA says the real estate market remains promising and that cash-strapped local developers should consider transferring their projects to foreign companies as a practical move to get out of the doldrums.

Many foreign investors are interested in the domestic real estate market and willing to inject funds into long-term projects. Since they are not familiar with administrative procedures here in Vietnam, they often choose to take over half-done projects.

In the long term, Deputy Minister Nam says, increasing the supply is one of the best solutions to cope with the volatility of the market. Thereby, the ministry has asked provincial authorities to review property development projects and make a list of priority projects.

To do this, investment, land allocation and land clearance should be sped up while punitive sanctions should be taken against any delays in the project implementation process.

However, according to both local and foreign investors, the most important thing is that the transparency of policies for the real estate market must be ensured to help develop the market in a sustainable manner and establish real value for property.

Vietnam Real Estate

Banks refuse loans to real estate firms

23 Jun
Viet Nam’s real estate market is suffering a severe lack of capital as banks shut off credit flows to the industry.
The credit crunch is not only having a negative affect on property investors though. Banks are also refusing to lend to private individuals who wish to borrow money to buy their own home.

Put in a difficult position, many construction companies have this year deliberately slowed the speed at which their projects are being built. They are prepared to wait until macroeconomic stability returns.

A clothing manufacturer in HCM City has been forced to delay the construction of a commercial and office centre planned for District 5 after two partners postponed their involvement due to the acute credit shortage.

“Currently, it is too difficult to mobilise money from banks or the stock market,” the company’s director said.

As well as having difficulties in obtaining new capital, investors with existing loans are being squeezed by dramatically rising interest rates and pressure from banks to pay back debts. Some property investors, who often must wait a long time before they see a return on their investments, have reluctantly sold properties at low prices to settle debts or raise capital.

Some enterprises have raised money by issuing bonds – but this isn’t an option available to everyone. “Only if people believe that an enterprise will be able to acquire capital from the banks, is it able to issue bonds,” said Tran Minh Hoang, chairman of the Vinaland Real Estate Company.

The best solution at the moment would be for the government to re-examine its Real Estate Law, Finance Law, Penal Code and Land Law, he said.

International property companies obtain capital from many sources, such as insurance funds, retirement funds, the State and financial agencies. However, Viet Nam’s real estate industry is almost completely reliant on the banks. If the domestic banking industry continues to restrict lending for construction, the supply of property, already a chronic problem in Viet Nam, will only get worse.

Dang Hoang Vu, director of the Thanh Binh Real Estate Trading Joint-stock Company, blames the banks for the current situation. The government and credit agencies provide finance to the property market through the banking industry. And it is the banks that have retreated from their role of ensuring that construction projects are realised and managing the flow of capital to the property industry, he said.

Private individuals with average household income are also being hit by rocketing interest rates. Unable to buy a house without a bank home loan, house-hunters must be prepared to take on a debt with an interest rate as high as 21 per cent.

Vietnam Real Estate

City house prices continue to fall

23 Jun
Property prices in HCM City are continuing to fall after a sharp rise during late 2007.

Independent market experts says that prices of properties in the city have dropped by between 50 and 60 per cent compared with last October, when prices began to escalate.

Price of land plots at new residential projects in the Sai Gon South new urban area, and Binh Chanh and Nha Be districts fell by 60 per cent to VND15 million per sq.m.

Vuong Dinh Tue, director of a property brokerage company at District 7’s Sai Gon South new urban area, said the Him Lam-Kenh Te project had the best location in the area but plots were only VND25 million per sq.m, down by 60 per cent compared with October last year.

When prices began to increase quickly between October and early this year, several plots for the Him Lam-Kenh Te project located beside 35-metre roads reached between VND80 and $90 million per sq.m. But they are now down to VND40 million.

Also at Sai Gon South, land prices at the Tan An Huy project dropped from VND60 million per sq.m to between VND21 and 25 million.

Steeper drops in prices occurred in areas that are not considered prime locations.

Land prices at the Phu Xuan residential area, the University Village, Thai Son 1, 2 and Lap Phuc in Nha Be District also fell by 60 per cent to between VND9 and 15 million per sq.m.

Although land prices at District 2’s Thu Thiem new urban area fell more slowly they now stand at only VND18 million per sq.m.

Large volumes of apartments have been for sale at local property brokerage companies but few purchases have been made.

The Van Phat Hung Company offered the most apartments at the Phu My Thuan Building area, with prices ranging between VND7.8 and 13 million per sq.m, down by nearly 50 per cent. However, only a few were sold.

High-end apartment projects also dropped. Prices of apartments at Sai Gon Pearl fell from US$3,500 and 4,500 per sq.m to the current US$2,500 and $2,800.

The office building market is still hot, but shows signs of cooling down.

Except for the A-grade office buildings that have rental prices of US$65 and $70 per sq.m a month, the number of customers wanting to rent offices at B and C-grade buildings has fallen significantly in recent weeks.

Market experts said that most office renters at A-grade office buildings were big companies that are financially strong and can afford high rental prices.

Customers of B- and C-grade office buildings include smaller companies which are trying to cut costs to cope with market fluctuations.

Vietnam Real Estate

High cost stops owners claiming land-use titles

21 Jun
High registration fees are discouraging residents from collecting land-use certificates, which confirm their rights to use their homes.

Piles of uncollected certificates are sitting at district offices, according to the head of Ha Noi Natural Resources, Environment and Land Department’s Statistics Registration Office, Nguyen Van Quang

The Ha Noi People’s Committee has issued 65,000 land use certificates. People, however, are not interested in collecting them as most of them live in the outlying districts of Hoang Mai, Dong Anh and Gia Lam.

Each household in these districts is granted a land use certificate for around 300sq.m of land.

As registration fees are based on land value, residents have to pay, on average, between VND3 million and 5 million to collect the papers.

Many people are saying that they can’t afford anything more than VND1 million to 2 million.

Gia Lam District has granted 12,000 land use certificates, but only 100 people collected their papers. Head of Gia Lam District’s Natural Resources and Environment Bureau Lai Thuy Nga said most people in the district were on low incomes and couldn’t afford the fees.

Since many people are not anticipating buying or selling their land now or in the near future, few felt the need to pick up the papers.

“It’s hard for us just to earn VND1 million,” said local Nguyen Van Nam.

“Why should we spend from VND3 and 4 million to pick up a land-use certificate just to keep it in the closet?”

Other locals in the district agreed.

Nguyen Van Canh owns a house and a garden covering 400sq.m of land. He and his wife were in no rush to pick up the papers because they would have to pay around VND3 million.

“Where should we get the money to pay for the registration fee?” asked Canh. “No one is trying to kick us out of our house.”

Hurdles

Under existing regulations, registration fees are 1 per cent of the value of assets to a maximum of VND500 million.

People’s Committees in cities and provinces are in charge of determining registration fees depending on Government land appraisals.

According to Finance Minister Vu Van Ninh, lands are appraised by People’s Committees. Ninh noted that these fees are going up as property value continues to climb.

Residents don’t only have to fork out money for registration fees when they pick up their land use certificates. They are also asked to clear other payments, such as taxes on land use transfers, among others. With little immediate benefit of owning the papers, these other payments are further discouraging residents from picking them up.

Construction Minister Nguyen Hong Quan agreed that the current registration fee of 1 per cent of an asset’s value was too high.

To tackle the issue, the Finance Ministry has asked the Government to reduce the fee by half.

The ministry also asked the Government to exempt poor, ethnic minorities from paying the fee.

It has also been recommended that people be allowed to begin the application process, even if they can’t afford it.

The Ministry of Finance suggested they allow some cases to be effective retroactively, to ensure land rights aren’t being compromised because land owners can’t afford the fees.

The National Assembly has set a target to finish granting all land use certificates by 2010.

Vietnam Real Estate