Gloomy market to get darker

A gloomy outlook coloured comments from various players looking at the prospects for 2013. The Vietnam Real Estate Association forecast the market will need three to five years to recover unless strong, effective measures are implemented.  

Pham Sy Liem, deputy chairman of the Vietnam Construction Association, said the prospects for recovery in the real estate market in 2013 would depend on the overall development of the economy and it was too early to say that the market could be better this year.

“The real estate market in 2013 still has revealed its downturn signs. However,  I hope that reasonable measures would lessen the decline,” Liem said.

The government recently outlined different measures designed  to rescue real estate market, among those being to extend land-use and leasing taxes for projects’ investors, as well as the reduction of other taxes such as corporate income and value-added tax.

But Liem said the aforementioned measures seem to support the suppliers, while the measures to help customers buy units in the overstocked market would be more helpful.

“The problem is how to help customers have their home, but not something related to the developers,” Liem said.

The balance between supply and demand, he added, must be resumed and can only do that after the real estate market escapes from its severe slump.

Policy makers, Liem suggested, must experiment on ways to help the recovery.

Offering a more optimistic outlook, Nguyen Manh Ha, director of the Ministry of Construction’s Department of Housing and Property Market Management, predicted that the restructuring of the market will succeed and the real estate market will brighten in 2013.

“This is a cycle and we have seen the same story in other countries and I think this is reasonable,” Ha said.

Alan Phan, former chairman of the Viasta Investment Fund, predicted that real estate prices would continue their meltdown until June.

Talking with local press, Phan said that this was because the government could not issue more currency for solving bad debt - to contain inflation - while banks, real estate developers and customers are running out of money.

Moreover, the customers lack confidence in the real estate market recovery and thus remain reluctant to invest.

“We need breakthrough measures which are strong enough to put the market through, or the economy will be developed in slow process in the next years,” Phan said.

Le Chi Hieu, chairman of the Thu Duc House, predicted that  2013 will see a boom of mid-end apartments and tougher competition among developers.

“2013 is also a year reserving for daring investors who are holding much cash and are able to take over other projects (M&A) and wait for the market recovery,”  Hieu said.