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Property Market: Likely Recovery?

4 Jun
2012 has seen more positive than negative news, a rally in the stock market, downward inflation and three interest rate cuts in three months. Why is the property market still quiet?

According to the new report released by Knight Frank – the global property consultancy, the past 3 years has knocked the confidence out of the property market, many companies and individuals involved in the real estate market lost considerable sums of money and when people lose confidence they look for alternative safe havens to invest and for most Vietnamese, Gold, Bank Deposits and Equities proved more attractive than property.
 
However, there is some light at the end of the tunnel, tighter legislation on gold trading, a downward trend on bank deposit rates and profit taking from the stock market has meant that momentum is beginning to shift and the spotlight is once again beginning to shine on real estate.
 
Knight Frank is seeing many of the more experienced developers, investors and buyers that have sat on the sidelines over the past 12 months now deciding that this is the time to dip their toe back in the real estate water. With further interest rate cuts predicted throughout the course of 2012, confidence is slowly beginning to come back to the market, provided the global economy doesn’t give investors any further nasty shocks for the remainder of the year and inflation remains stable. “We firmly believe the real estate market will start to recover”, Knight Frank reported.
 
Ultimately, the real estate market needs cheaper money available to buyers and developers. However, investors would encourage a steady decline in interest rates over the next 12-18 months which will bring some certainty and stability back to the market.
 
Real estate market is still receiving strong interest from foreign investors that see there is a window of opportunity; however, the obstacles and hurdles remain the same. In order for Vietnam not to lose out on this much needed investment to other countries there remains a strong need for much tighter regulation throughout the whole real estate industry with a strong and effective legal framework, with more professionalism and transparency. With further control and tighter legislation there is no question Vietnam will benefit from more and more foreign investment.
 
So where is the opportunity? Due to a very stagnant property market, development within the country declined dramatically over the past 2/3 years and whilst it may be difficult to envisage at this stage, as soon as the market starts to improve, existing stock in most sectors, especially Office and Residential, will be soaked up pretty quickly, which will lead to increased prices and rentals and a shortage of stock. So within 24-36 months, we will be in a very different position.
 
From another property consultancy, Marc Townsend, Director General of CBRE Vietnam still forecast that in 2012, businesses and individuals can gain profits from opportunities in the Vietnam real estate market.
In the CBRE Vietnam’ report published in April, while the Hanoi apartment market saw secondary price increase in the past three year, that in HCMC has been rather stable. It is estimated by CBRE that housing price in Hanoi will stay still, similarly to the trend in HCMC in recent years. This is reinforced by evidence showing that the number of remaining condo apartments in Hanoi is about 16,000 while the number of those expected to be offered in 2012 is up to 22,000 ones.
 
Mr Nguyen Trong Ninh, Deputy Director of Housing and Real Estate Market Management Department (Ministry of Construction) said: In previous years, the property market developed strongly, but the development is disassociated with specific strategies and plans, leading to serious imbalance in supply and demand. Besides, the credit system was not strong enough to fund medium and long-term development objectives.
 
 “From 2012 to 2015, there will be a market adjustment wave. There will be both some insiders leaving and some new participants in the market,” said Mr Tran Kim Chung, General Director of C.T Group. The market will remain stable or decline a bit during 2012, then go up from the end of the year and reach the peak at approximately the end of 2014 or the beginning of 2015. However, from now to that time, real estate should overcome its inertia in the transition from monetization to financialization.
 
Reported by Huong Ly | VCCI News

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Vietsin D7 Retail Mall

18 Nov

VNRE – VCCD Vietsin commercial complex development envisions the Vietsin Saigon South Commercial development in District 07 HCMC to be an international standard mixed use development. It will be designed with four towers and one office building as a leader in the retail and leisure sector setting the benchmark for future building design and performance in Vietnam. A landmark retail and lifestyle destination, this retail destination positions itself as the destination of choice for local and surrounding districts of HCMC.

The concept brings together:


The skypark – This unique outdoor environment is situated on the roof of the centre spanning over an acre of layered rooftops, offering leisure and dining experiences amongst a green space including: Amphitheatres, children’s play zones and water environments where you can rest and replenish.The Skypark cultivates a green ethos, harnessing nature’s energy and becomes the leader of Vietnam’s alternative energy landscape.

The media wall – a semi translucent back-lit, frameless, glass system which can include lighting, pattern, media, and signage applications.

The Bracelet – A living skin which dances, reflects and metamorphosis into an embracing iconic form. From day to night the building transforms, offering the visitor a varied experience.

SWA Vietnam associate with HOK.

Source: SWA Vietnam

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10 Jul

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Private investors possibly develop hi-tech parks

15 Dec
Local and foreign investors will be able to set up and develop hi-tech parks and agro parks which have so far been invested through state budgets, the Ministry of Science and Technology said yesterday.

Do Van Loc, head of the ministry’s hi-tech department, said at a seminar on investment into hi-tech parks held in HCMC yesterday, that the National Assembly had approved the new law allowing private investors to invest in high tech parks staring in July 2009, a decision that will reduce strain on state budgets.

Investors will get the same incentives for the development of hi-tech infrastructure as the state, Loc said. The new law allows existing industrial parks with several hi-tech projects to transfer into hi-tech parks if they qualify.

The developers will also get the highest incentives for using land for research, technology, enterprise breeding and infrastructure and the Government will support investors building infrastructure for communication, transportation, electronics, water supply and waste treatment, Loc said.

Vietnam has two hi-tech parks, the Saigon Hi-Tech Park and the Hoa Lac Hi-Tech Park in Hanoi, and six agro parks.

According to the ministry, some foreign investors are planning hi-tech parks in Vietnam and others have already invested in hi-tech park infrastructure to attract hi-tech companies.

Singapore’s leading real estate developer, Mapletree Investment Pte. Ltd., recently cut a deal with Vietnam’s Becamex IDC Corp., allowing the Singapore partner the exclusive right to develop a 75-hectare business park in the southern province of Binh Duong.

Under the agreement, Mapletree plans to invest US$400 million to develop an integrated business park inside the 4,200-hectare Binh Duong Integrated Township partly owned by Becamex. The new industrial estate, to bear the tech-sawy name, Mapletree Business City @ Binh Duong, will be the company’s maiden integrated business park development in Vietnam. The park will be a world-class modern business park catering to various high tech industries, software and product development, research and development and value-added manufacturing. “It will be a world class modern business park with a comprehensively planned environment for business. Development will be in phases from 2009,” said Edmund Cheng, chairman of Mapletree Investments.

At the seminar, Phan Huu Thang, head of the Foreign Investment Agency under the Ministry of Planning and Investment, said Vietnam’s hi-tech sector is the most attractive to foreign investors. Vietnam has 100 hi-tech companies from around the world including Intel, Foxconn, Nidec, Samsung and IDG and has attracted US$7 billion from foreign investors.

Source: Saigon Times

The four problems of the real estate market

30 Nov
The quietness of the real estate market is a reason for the slowdown in economic development. There are four problems in the real estate market, according to Tong Van Nga, Secretary General of the Vietnam Real Estate Association.


Do you think that the fall of the real estate market is the reason behind the economic development slowdown?

Yes, I do. If real estate investment and business develops well and steadily, this will lead to the development of the construction industry, construction material production (steel, cement, materials for interior decoration) and other industries, including woodworking, electricity, and electronics production. And of course, when the real estate market is quiet, relevant industries suffer.

What are the biggest problems of the real estate market now?

There are four problems. First, the number of real estate transactions carried out on licensed trading floors remains modest, while underground transactions remain popular.

Second, the structure of commodities in the real estate market proves to be unreasonable. The market lacks the apartments that fit the pockets of employees. Meanwhile, investors have injected too much money in building high-grade and luxury villas to serve high-income earners and speculators. Therefore, the real estate market suffered heavily when the bank interest rate increased considerably.

Third, there exist problems in the regulations on compensation for local residents for site clearance. The procedures for granting investment licenses and the procedures for granting red books and pink books, the certificates on house and land use right prove to be very complicated.

Fourth, banks are not really the ‘fellow-traveler’ of real estate developers and real estate buyers. There has not been any long-term fund for the real estate sector in particular, and industries in general.

Currently, real estate developers have been relying on short-term loans from banks, which banks mobilize from the public. That is why the real estate market suffers immediately when the interest rates fluctuate.

Some experts have said that the difficulties of domestic real estate developers are caused by a lack of capital, and this provides opportunity for foreign investors. What is your comment about that?

It is true that while Vietnamese enterprises are facing difficulties due to the lack of capital, foreign investors have jumped into Vietnam, especially the central areas in Hanoi and HCM City.

Foreign investment funds have been taking full advantages of this, offering cooperation with domestic investors or asking to buy back projects at low prices.

Commercial banks have resumed real estate credit, while having slashed lending interest rates. How will this affect the real estate market?

This is really a good sign, but it is not enough to recover the real estate market.

Source: TBKTVN/
Image by: Blue_milkyway88

The four problems of the real estate market

28 Nov
The quietness of the real estate market is a reason for the slowdown in economic development. There are four problems in the real estate market, according to Tong Van Nga, Secretary General of the Vietnam Real Estate Association.


Do you think that the fall of the real estate market is the reason behind the economic development slowdown?

Yes, I do. If real estate investment and business develops well and steadily, this will lead to the development of the construction industry, construction material production (steel, cement, materials for interior decoration) and other industries, including woodworking, electricity, and electronics production. And of course, when the real estate market is quiet, relevant industries suffer.

What are the biggest problems of the real estate market now?

There are four problems. First, the number of real estate transactions carried out on licensed trading floors remains modest, while underground transactions remain popular.

Second, the structure of commodities in the real estate market proves to be unreasonable. The market lacks the apartments that fit the pockets of employees. Meanwhile, investors have injected too much money in building high-grade and luxury villas to serve high-income earners and speculators. Therefore, the real estate market suffered heavily when the bank interest rate increased considerably.

Third, there exist problems in the regulations on compensation for local residents for site clearance. The procedures for granting investment licenses and the procedures for granting red books and pink books, the certificates on house and land use right prove to be very complicated.

Fourth, banks are not really the ‘fellow-traveler’ of real estate developers and real estate buyers. There has not been any long-term fund for the real estate sector in particular, and industries in general.

Currently, real estate developers have been relying on short-term loans from banks, which banks mobilize from the public. That is why the real estate market suffers immediately when the interest rates fluctuate.

Some experts have said that the difficulties of domestic real estate developers are caused by a lack of capital, and this provides opportunity for foreign investors. What is your comment about that?

It is true that while Vietnamese enterprises are facing difficulties due to the lack of capital, foreign investors have jumped into Vietnam, especially the central areas in Hanoi and HCM City.

Foreign investment funds have been taking full advantages of this, offering cooperation with domestic investors or asking to buy back projects at low prices.

Commercial banks have resumed real estate credit, while having slashed lending interest rates. How will this affect the real estate market?

This is really a good sign, but it is not enough to recover the real estate market.

Source: TBKTVN

Property buyers wait for prices to fall further

24 Nov
The HCM City real- estate market could not recover this year as buyers were waiting for prices to fall further and were unable to get loans to buy property, according to some experts.


Le Hoang Chau, chairman of the HCM City Real Estate Association, said prices had fallen by an average of 40-60 per cent, although losses of up to 70 per cent were not uncommon from the peaks at the beginning of this year.

He said the market remained frozen, with hardly any deals taking place. Even potential buyers said they were hoping for prices to fall further, he added.

Liquidate

Do Thi Loan, general secretary of the association, said many people were being forced to liquidate their properties to repay bank loans.

But apartment prices were unlikely to fall any further, she said.

The State Bank of Viet Nam Governor, Nguyen Van Giau, announced this month that banks could lend for real-estate development and many domestic and foreign banks had resumed lending to actual house buyers.

But they imposed stringent conditions and the loans were still extremely hard to obtain.

The Personal Income Tax Law, set to take effect next January, is also hurting the market. It requires property sellers to pay a tax of 25 per cent of the profit or 2 per cent of the sales price.

Nguyen Manh Ha, head of the Ministry of Cons-truction’s Housing Management Department, said there was still big demand for moderately priced houses. As a result, strong price declines had occurred, mainly in the new apartment and high-end housing segments. The prices of cheap and medium-priced property have remained unchanged or fallen just a little.

Ha also recommended that developers follow market trends and focus on building smaller apartments.

(Source: VNS)