A solid rock amid some turbulent seas

Edward Chi

The depreciation of the Vietnamese dong against the US dollar has had big impacts on the real estate market. VIR talks to Minh Viet Investment Corporation CEO and chairman Edward Chi on his strategy to cope with the uncertainty.

How are your two iconic projects, Tricon Towers and The Bayview Towers, getting along?

Tricon Towers in the heart of Hanoi’s Splendora township and The Bayview Towers at Halong Bay are the two of our typical projects under construction.

The two properties are aimed to create iconic high-end apartments in Hanoi and Quang Ninh province. Thus, since the early stages, we have sought and contracted with prestigious constructors to ensure the projects are developed on schedule.

Accordingly, buyers will receive their Tricon Towers apartments in the middle of 2012 and The Bayview Towers apartments in 2013.

How does the continuous increase of building materials affect the projects’ construction?

The continuous increase of building material prices has caused severe difficulties for project investors. However, we have anticipated such price movements  and devised a sound financial plan to implement the projects actively.

For investors whose financial capacities are not strong enough, unexpected price rises will really be a big problem and there projects’ future will be uncertain unless they can develop proper restructuring and financial plans. In other words, poorly planned projects will have to be ceased, helping the market develop more sustainably and steadily.

Will you hike apartment selling prices?

While many other project investors have been forced to raise selling apartment prices to respond to the current difficult economic conditions, we have decided to keep our prices unchanged. We want to share the financial burden with our customers.

Still, we encourage buyers to make decision as soon  as possible to avoid the risk of complicated market price movements. I have met many people who failed to turn their dream of owning an apartment into reality because of their undetermined manner. At some points of our life, it is necessary to make risky decisions.

Your selling prices are currently pegged to the dollar, which  is just appreciated by 9.3 per cent due to the State Bank’s new exchange rate policy. How has this impacted on your business and will there be possibly a price adjustment?

I think we cannot say the central bank’s recent adjusted exchange rate is a devaluation  of the dong. It is more correctly to say the move is just to adjust the exchange rate to a more reasonable level to minimise the gap between official and black market rates. The previous official exchange rate actually made firms incur a 10 per cent loss when changing dong to dollar. 

As I said before, we want to share the financial burden with our customers, therefore we will keep our prices stable in an acceptable range. At the same time, we will join hand with large banks to provide financial assistance for our buyers. It is the most important to provide our customers with the best services and values.

Given the current high inflation, interest rate and the new forex management policy,  what do you think about the future of the Vietnamese property market?

I think the government’s new policies will help improve the property market transparency. With current interest rates, inflation and  exchange rate movements, there will possibly be a shift in the capital flows, from the idle money currently deposited at banks into other investment  channels, including gold, equity and property. Real estate investment is obviously the most attractive channel thanks to their stability and long-term prospect. Most property investments will also be financed by end-users who really demand for housing as high interest rate will help decrease speculation substantially.

Meanwhile, minor investors will have to leave the market and poorly financed projects must stop, paving the way for the market sustainable development.

The fact that Vietnam was recently ranked the fourth most attractive emerging market for real estate investment in 2011  by the Association of Foreign Investors in Real Estate also shows the increasing attention of foreign investors to the Vietnamese real estate market.  

Do you think that the Vietnamese real estate market  contains bubble risks?

Many countries, including the most developed markets like the US, are concerned about a bubble risk. The Vietnamese government has therefore adopted several policies to avoid a possible property bubble. Besides, the market’s improved transparency and  buyers’ more prudent buying decisions have made speculation become difficult. It is important to prove and rebuild the confidence in the market.

However, despite a huge houding demand, a bubble risk still remain unless investors pursue a long-term vision and buyers’ herd mentality is swept out.