A tale of two cities

Nguyen Manh Tien, senior sales manager of CBRE Vietnam, said Ho Chi Minh City was suffering an oversupply of high-end apartments and sales was slow although developers were directly offering customers incredible preferential support.

Hanoi’s apartment market have also started performing signs similar to Ho Chi Minh City’s as supply has been fast increasing while the secondary market is becoming dormant and several high-end apartment projects are offering promotions.

A CBRE report released last week revealed that the new apartment supply in the second quarter was 4,587 units and in the latter half of the year, there would be around 10,000 new units launched, pushing the 2010 total new supply in Hanoi close to 20,000 units.

Several high-end projects such as Richland Southern, Mulberry Lane and Tricon Towers have started to offer discounts, bank financing support and favourable payment terms to quicken sales. However, Tien said Hanoi’s property market had its own features and it was not likely to suffer an oversupply like Ho Chi Minh City.

Tien said many developers in Ho Chi Minh City were financially strong companies that led to the rapid construction of housing projects and the oversupply. However, the story is different in Hanoi. The present new supply in the capital can be large in comparison with the new supply of previous years but is still much smaller than Ho Chi Minh City’s. And it takes a long time for Hanoi to have the plentiful pipeline supply as in Ho Chi Minh City.

“Besides that, customers in Ho Chi Minh City often borrow money from banks or mortgage property to invest into apartment market. Whenever the market has the fever, they pour all of money into, but ready to sell at lower prices to cut loses when the market has trouble,” said Tien.

“Hanoi-based customers with large available savings can contend much longer and not accept to sell their property at low prices,” added Tien. The evidence can be shown by successful launching of apartment projects in the first half of 2010 in the primary market such Dang Xa new urban area in Gia Lam district, Ecopark in Van Giang district, Hung Yen province, The Pride in Ha Dong district.

The developers got good turnover as 99 units of Dang Xa new urban area was sold out within two days of launch, 90 per cent of nearly 600 units at Ecopark within one week and 50 per cent of total units in the first launch of The Pride was purchased.

By Thanh Thuy