Grounds for optimism as market thaws

Developments that offer good value and high quality services have been the first to recover

The Ho Chi Minh City residential market segment seems to be showing signs of a cautious revival. Buyer interest has increased off the back of cheaper credit and valuations almost falling to cost price, bolstered by a rash of incentive programmes.

According to figures from CBRE, prices over the wider apartment for sale market fell some 30 per cent compared to their peak in 2007, and prices and have now reached levels deemed to be what the market feels is affordable.

Well located good quality developments are registering higher sales. Those include the Estella, Vista, Sunrise City and Nam Long’s E-home projects.

The catalyst appears to be discounts and extended payment terms that allow buyers to make payments over three to five years and furniture packages. Higher sales in these projects have been consistently reported since early this year, and this trend is expected to continue into next year.

Meanwhile, the Hanoi residential market after a year of remarkable price cuts has seen developers promote bare-shell products.

Popular developments have included Mulberry Lane and Mandarin Garden. A series of low-end projects with thousands of small sized units at affordable prices have also seen a peak in sales, including Golden Silk, Tan Tay Do and Sails Tower.

 Dang Ngoc Chau, senior manager for residential project marketing at CBRE, said after the stagnation of recent years, the residential market in Ho Chi Minh has turned into a property buffet party for residential purchasers. 

“The weak market has spurred a range of incentive programmes that have sparked some interest. Hanoi developers have offered early hand-over arrangements and improved project utilities and offered reduced or free management fees. Vingroup’s Royal City and Time City projects offered buyers a 10-year exclusion on management fees which helped stimulate buyer interest. Hanoi buyers are still however adapting a wait and see approach,” said Chau from CBRE.

In Hanoi, recent months have reflected a remarkable increase in residential selling, especially for mid and low-end housing

A range of projects have been opened for sale in the market, such as Tan Tay Do, Van Phu, Sky Garden, Golden West, Discovery Complex and many others.

According to experts, the key factor remained price. Developers who understood that demand for mid and low-end residential remained very high and were focusing on developing projects for this market segment would do well.

According to Trinh Dinh Dung, Minister of Construction, property inventories compared to the same period of last year had fallen.

Figures from Ministry of Construction revealed that unsold residential developments had remarkably reduced in the closing months of 2013.

Despite the end of the year prediction that VND96,800 billion of property would still remain in stock, this figure was 25 per cent lower that in the first quarter of the year.

However Dung added that positive signs could be seen in the low-end and social housing projects. Transactions in this segment had doubled compared to the first two quarters of the year.