Deathbed market slowly breathing

Recently, developers have started to re-launch projects with reduced prices to woo customers amid signs the frozen market may be thawing as interest rates decrease.

Mai Linh Investment Company three weeks ago offered a price of less than VND30 million ($1,428) per square metre, a reduction from VND2-9 million ($95 to 428) per square metre in its Golden Palace apartment complex in My Dinh district.

Meanwhile, HUD Real Estate Transaction Centre opened sale of 115 apartments from the New Skyline project with a price from VND27 million  ($1,285) per square metre.

Last week, Maxland Real Estate Transaction Centre started selling its apartments in Ha Dong district’s The Sun Garden with a starting price of VND14.5 million ($690) per square metre.
To add to the list, the Berriver Long Bien apartments will be re-launched next week and Tay Ho Residents is expected to be introduced to the market next month.

Vu Xuan Thien, deputy director of the Ministry of Construction’s (MoC)  Management Bureau for House and Real Estate Market, said the current prices offered by developers were more appropriate for end-users who had a real demand for accommodation.

Thien said bankers were offering reductions in interest rates to customers and developers.
Especially, BIDV just opened the door to $96 million in low-income housing funding to help meet an acute shortage.

In the next two years, BIDV will work with the MoC, contractors and investors to channel this money, which will have an interest rate equal to that offered by the Vietnam Development Bank, for low income housing.

Stephen Wyatt, country manager of Knight Frank Vietnam, said: “There is some light at the end of the tunnel, tighter legislation on gold trading, a downward trend on bank deposit rates and profit taking from the stock market has meant that momentum is beginning to shift and the spotlight is once again beginning to shine on real estate.”

“We are seeing many of the more experienced developers, investors and buyers that have been sat on the sidelines in the past 12 months now deciding that this is the time to dip their toe back in the real estate water,” he added.

Wyatt said with further interest rate cuts predicted throughout the course of 2012, confidence was slowly beginning to come back to the market. “That is why we firmly believe the real estate market will start to recover,” he said. He added that Vietnam was still receiving strong interest from foreign investors, however obstacles remain.

“In order for Vietnam to lose out on this much needed investment to other countries, there remains a strong need for much tighter regulations throughout the whole real estate industry with a strong and effective legal framework, with more professionalism and transparency. With further control and tighter legislation there is no question Vietnam will benefit from more and more foreign investment,” he said.