City’s glut of luxury apartments

The southern hub’s luxury apartments are failing to turn investors’ heads

Buyers can now easily secure luxury apartments at Saigon Pearl, The Vista, Estella, Booming Park, Phu Hoang Anh Complex and Hoang Anh Riverview.

This situation is in stark contrast to several years ago when buyers had to line up in crowded rows to register to buy or paid extra money worth hundreds of millions of Vietnamese dong for such an apartment.

Tran Van Hai, a director with Vinaland Phu My Hung Property Trading Centre, said that luxury apartment supply had increased as more projects registered to sell in the past three months, Vinaland Phu My Hung unsuccessfully carried out any transactions for this segment.

“Many developers accepted to sell products at [sharp] discounts from their original prices, with losses of hundreds of millions of Vietnamese dong, however, they still could not sell. The problem is that there are few buyers,” said Hai.

Nguyen Minh Suong, director with Dai Nam Real Estate Company, added that investors who previously bought luxury apartments in Ho Chi Minh City was short-term speculators.

Normally, Suong said, when property developers introduced their products at VND4-5 billion ($210,000-$263,000) an apartment on average, buyers had to deposit 30 per cent and then pay according to the project’s construction progress. The buyers who lack capital would sell the registered apartments immediately if they find buyers to earn wuick buck but now the situation has not supported such ideas.  

Not only investors, but also project developers faced difficulties when the market is frozen. In order to sell apartments, developers have to reduce prices. A large high-end property project in the south of Ho Chi Minh City is offering a luxury apartment at   $1,700-2,000 a square metre, compared to the initial prices of $2,600-2,800, but has not find enough buyers.

Developers faced more challenges as bank loans were limited, unable to sell products while the project is ongoing, according to market analysts.

Vinaland chairman Tran Minh Hoang said that the reason behind the sluggish luxury property market was that money inflows into the market were limited. Therefore, investors have attitude of waits and sees. “In addition, the over supply is also a concern and investors also prefer land to apartment,” said Hoang.

Dinh Quoc Luc, business director with Hoang Linh Property Company, added that although the prices for high-end apartments were falling to new lows but still high for numerous income earners. With the average price of $1,300-2,000 a square metre, few buyers can afford.