Gloves off as fight is on to hook deals

Mai Linh Investment Company last week launched the Golden Palace apartments to the public at prices starting from VND27.5 million ($1,322) per square metre, or VND2-9 million ($96-432) lower than the prices it sold last year.

Faced with fierce competitive from secondary investors who are also struggling to sell apartments to cut losses, Mai Linh had to be more flexible in selling products.

“When deciding to reduce the price, we carefully considered ways to support our secondary investors who have bought our apartments before,” a Mai Linh sales representative said. Mai Linh is one of many developers directly decreasing apartment prices.

Hoang Van Anh, director of Song Da Urban Development, said the company would slash prices for its Nam An Khanh low-residential project, apartments in 25 Tan Mai Building and the Song Da-Ha Dong Building

“In the current situation this is the good way to increase liquidity and help us to have quick investment returns to continue projects,” Anh said.

Over-leveraged domestic developers have aggressively cut prices to pay back loans and offered juicy carrots to potential buyers.

Mai Linh’s move followed other developers who have reduced prices. The unfurnished apartments at Thang Long Garden developed by Thaloga in Minh Khai street are now sold at VND21 million per square metre ($1,000), a reduction of VND7  million ($333) compared to rates announced last year.

According to CBRE, developers have further softened prices, with 53 per cent of newly-launched units priced below $1,000 per square metre, a pattern rarely observed since 2007’s residential market boom.

CBRE managing director Marc Townsend said developers seeking impressive investment returns would continuously decrease their prices throughout the year. “Developers will have to reduce their expected profits from 15 to 20 per cent in this difficult situation,” Townsend said.
However, former deputy minister of Natural Resources and Environment Dang Hung Vo said these decreases in Hanoi were different to ones in Ho Chi Minh City.

“In my point of view, some price-cutting projects are by developers who are struggling to increase their liquidity. Others are mainly located in unfavourable areas and they will still be unattractive when the market warms up. Obviously, many weak investors have collapsed since the market is unfavourable,” Vo said.

Vo added that the slump primarily came from a tightened monetary policy, but not all segments were affected by markdown pressures.  

“Prices of second homes and street houses still remain high, although fewer deals are reached. This lacklustre performance is caused by the economic slowdown. Vietnamese people are keener on residential houses than on apartments,” he said