Apartment owners look to cut their losses

A view of Thu Duc city

Selling quotations have been high since the establishment of Thu Duc city in Ho Chi Minh City. However, over the past few months, apartment and townhouse projects are being quoted at a much lower price compared to before this summer’s restrictions took hold.

According to Bui Tung, a freelance broker in Thu Duc city, a ​​​100-square-metre townhouse in Pho Dong Village could be sold at around $435,000 per unit.

This is 40 per cent higher than before the establishment of Thu Duc city in 2020. However, the units were advertised in the last three weeks at a discount of $17,400-21,700 per unit.

The reason for this price reduction, according to Tung, is that many property owners cannot afford the interest of bank loans as long as the pandemic persists.

“My clients whose property I sell said that they want to sell the property as soon as they can to avoid interest rates from banks,” Tung said.

Meanwhile, many apartment buyers are also looking to sell to reduce financial pressure.

Minh Cuong is an investor who bought an apartment in Binh Duong province. Up to now, he has paid 70 per cent of the apartment value to the project developer. However, Cuong now has to find a way to sell his apartment because his finances are exhausted.

“My next installment payment is due in October but a cousin who promised to lend me the sum can no longer do so. He is also having financial difficulties caused by the pandemic,” Cuong said.

Income from the apartment and house rental dropped sharply, while interest expenses did not decrease, strongly impacting financial capacity. Therefore, investors have to sell their apartments at equal or even lower prices than they bought them to recoup their capital.

In Hanoi, many apartments in the D’Capitale Tran Duy Hung project were recently advertised with a sharp reduction in price. A 2-bedroom unit in this project sold at $182,600 in 2017 is now advertised at 70 per cent of this price only.

A similar situation was seen at Sunshine City where many owners are selling at $1,600 per sq.m compared to the previous $1,830.

High-end apartments in Hanoi, mainly in Hadong, Thanh Xuan, Cau Giay, and South Tu Liem districts, are also sold at a reduced price of around $130-215 per sq.m.

Distressed sales are even higher in condotel apartments after two years of legal delays, with condotels not yet recognised as accommodation.

In Nha Trang, many condotels on Tran Phu, Nguyen Thi Minh Khai, Nguyen Tat Thanh, and Pham Van Dong streets are being offered at a common reduction of $4,400-13,000 per unit compared to the same period of last year. Many owners are selling at around the same drop in the popular Danang streets of Ly Thuong Kiet, Truong Sa, Vo Nguyen Giap, and Ngo Quyen.

Reductions are often being reported by the owners themselves, and not by the developer. Some current owners are struggling to balance their cash flow, and then look to sell their properties. Meanwhile, the price cuts have not involved existing developers because the fund of property products that can be sold to the market is very limited.

Even though prices have dropped in some areas and projects, developers are finding it hard to grasp buyers because of social distancing regulations. On top of that, selling through online channels is not yet efficient enough for most, especially for small investors or individual sellers.

Nguyen Van Dinh, vice chairman of the Vietnam Association of Real Estate Realtors said, “The trend of distressing apartments and condotels has appeared from the previous waves of the pandemic. If the pandemic lasts until the end of this year, many more assets will be offered at much-reduced prices.”