10 outstanding events of real estate market in 2008

30 Dec
Vietnam Real Estate – The sharp falls of the real estate market, for the first time in many years, prove to be the most prominent event.

1. Real estate prices decrease dramatically

This was the first time in many years that the real estate market witnessed sharp falls in prices.

The sharpest price falls occurred with housing prices, especially high-grade houses, with 20-40% decreases.

The price falls were anticipated by experts, who said that the price decreases would come after an overly hot development period. The main reason behind the sharp price falls was the government’s policy on tightening real estate credit aiming to curb inflation.

2. FDI in real estate saw record high

The Ministry of Planning and Investment (MPI) has estimated that to date, the foreign direct investment (FDI) capital in real estate has exceeded the total registered FDI of 2007, or more than $20.3bil.

While economists have warned about bad consequences of the overly high foreign investment in real estate, MPI’s Foreign Investment Agency has said this is not a concern.

3. Hanoi has been expanded

On May 29, the National Assembly officially ratified the resolution on expanding the capital Hanoi. The information was heard by investors. For the past year they have been pocketing money from trading land plots Hanoi was expanded to.

The prices of the land plots in the areas increased dramatically in the days before the areas belonged to Hanoi.

4. MoNRE gets right to define land prices

On December 1, 2008, the Prime Minister signed a decision on assigning the Ministry of Natural Resources and the Environment, instead of the Ministry of Finance, to define land prices.

5. Investment in golf courses boomed

In the decade prior to this year, the country licenced 13 golf course projects. Meanwhile, 144 projects were licenced just within a half of this year. Experts have attributed the boom of golf course projects to the profit they can bring.

Some local authorities have stopped licencing golf projects, which has made the investment wave cool down. However, this does not mean that the movement will stop, as this remains a profitable investment channel.

6. Rushing to open real estate trading floors

Despite the gloomy real estate market, investors have still rushed to open real estate trading floors.

However, according to the Ministry of Construction, while the number of trading floors has increased rapidly, the quality of the floors remains low. The ministry plans to set requirements on the floors in order to ensure the transparency of the market.

7. Real estate shares not favoured

The plan by real estate firms to obtain high profit set earlier this year has completely failed. This has led to the sharp falls of real estate shares.

In 2007, real estate firms’ shares were priced at VND100-200,000/share, while the price has dropped to VND20-30,000/share this year.

8. The movement of selling houses on paper

The movement is considered both the cause and the consequence of the real estate bubble.

The Vista, Blue Diamond, Sky Garden III and The Adonis in HCM City, Landmark Tower by Keangnam Group in Hanoi have been cited as typical examples of the movement. As for Landmark Tower project, while the foundation of the project was still being constructed, the investor signed contracts on selling 918 apartments, collecting $28mil.

9. The odd bet

The story began on November 13, when a group of veterans, architects sent a letter to Keangnam group, betting the group VND100bil that it wouldn’t fulfill the project on schedule.

In reply, Keangnam group affirmed that it would certainly fulfill the project on the occasion of the 1,000th anniversary of Thang Long-Hanoi, and accepted the bet.

However, for many reasons, the betting fell into oblivion.

10. Consultants were threatened with lawsuits

Some real estate developers in HCM City said that the information about real estate prices released by CBRE and Vinaland were incorrect.

Some of the developers have threatened to take legal proceedings against the consultants who said that high-grade apartment prices had dropped 52% by the end of November. However, the information has been proved incorrect.

(Source: VNE)
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: