Customers to strike while the iron is hot

Tran Xuan Hoang, deputy general director of BIDV, said that the bank was coordinating with many real estate developers to offer a  VND4,000 billion ($192 million) loan package to house buyers at  interest rates of 12 to 14 per cent in the first six months and the duration could be increased to 15 years.

Vietcombank has just signed an agreement with Vihajico – the developer of Ecopark, to support buyers in this project. Accordingly, from July to September this year buyers of the Palm Garden apartments, Pho Truc townhouses or Vuon Tung and Vuon Mai villas in Ecopark in the outskirts of Hanoi  will be offered a special interest rate of 8 per cent per year in one year since the loan is disbursed.

BIDV has also agreed to support interest rate for buyers in the luxury D’.Palais De Louis condominium project with the interest rate from 7 to 9 per cent in the first six months. That was not the end, together with bankers, developers are involving in support activities to customers.

According to CBRE Vietnam, a  strategy developers in Hanoi are  using is the use of preferential mortgage lending rate, which is made possible by the recent series of interest rate cuts. The subsidized mortgage rate until unit handover can be as low as 6-7 per cent per annum compared to the market rate of 15 per cent.

For instance, from September to the end of this year Vihajico will subsidize buyers with 4 per cent of interest rate  announced by Vietcombank.

However, this support is not as significant as the Indochina Land’s when the developer of Indochina Plaza Hanoi apartment complex last week teamed up with Vietcombank to offer a lending package to homebuyers with zero per cent of interest rate in the first year and a maximum loan of 60 per cent of the apartment’s value for up to  20 years.

Indochina Land claimed it was time to launch a charm offensive to lure buyers back to the high-end condominium segment. “Time is everything on our business and upon a review of our key internal and external demand drivers, there is strong evidence to suggest now is the correct time to launch an aggressive and bold initiative,” said Michael Piro, vice president of Indochina Land.

“The macro economy is improving and buyers sentiment is following in tandem, this is driven primary by a more relaxed lending environment and lower inflationary pressure,” Piro said.
“Additionally, buyers are trending towards completed or nearly complete projects that present very limited delivery or construction risk, seeing is believing and they are becoming much more discerning in their requirements for quality. Indochina Plaza Hanoi is ideally positioned to benefit in the current climate as the project is being completed at a very high-standard while being put into operation at this inflection point in the market,” he added.

Stephen Wyatt, country manager of Knight Frank Vietnam, said economic conditions within Vietnam have improved dramatically in the past 12 months with inflation plummeting from their highs in 2011 and interest rates falling. “With further interest cuts we believe the market will start to see increased activity in the second half of the year,” Wyatt said.

CBRE also stated that buyers’ interests seem to be back, with increasing number of inquiries in the review quarter. Understandably, real estate becomes more attractive as interest rates decline with mortgage lending rate now back to the pre-crisis level of 15 per cent in 2010 from its peak of 23 per cent in mid 2011.