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The unoccupied rates for A-grade and B-grade buildings were 34.5 per cent and 24.4 per cent, respectively.
The leasing price for A-grade buildings remains unchanged, while a price cut only came for B-grade building in western Hanoi due to oversupply.
In the last quarter of 2011, new supply outpaced demand by 5.72 times, with 143,000 square meters coming online, only 25,000 square meters of which was leased.
The new supply, 80 per cent of which was located in the western region, mainly came from 4 projects: the A-grade Landmark 72, and 3 B-grade - VA Tower, Detech Tower, and Mipec Tower.
To attract new customers, investors have offered many new add-on services, including free logo and hanging services, and longer free-of-charge periods for long-term deals.
Those who lease an area in central Hanoi for at least three years will be exempt from rental rates for 3-6 months, which will be lengthened to 8 months-1 year for 5-year or longer rental contracts.
With a number of new projects to be completed this year, including Western Bank, Licogi 13, Vicem Tower, Indochina Plaza Hanoi, and Apex Tower, lessees will have more chances to negotiate for reasonable prices, said CBRE.
New apartment supply slips, prices still high
With only 4,500 new apartments supplied to the market in Q4/2011, the segment saw a move contrary to that of 2006-2010, when new supply of apartments often surged by the year-end, said CBRE.
Liquidity shortages, especially at high-end projects, are the main problem, which has forced investors to adjust the speed of the offerings, Minh Son, an expert at CBRE, said.
The new products launched in the last months of 2011 tended to be more affordable, for example up to 45 per cent of new apartments are offered at below VND 25 million per square meter for primary buyers.
This number can be considered a benchmark between projects with good and bad sales capacity.
For secondary buyers, the offering price fell 3.5 per cent on average for the entire apartment segment.
In addition, investors also launched several promotional programs to encourage people to buy, such as those offered by the Golden Palace and Ecopark, which inlclude free furniture, or cars and early payment discounts for those who buy two apartments at the same time.
However, compared to early in 2008, prices at the end of 2011, excluding the inflation rate, still increased by 76 per cent for the low-price segment, 43 per cent for the medium-price segment, 20 per cent for the premium segment and, 5 per cent for luxury apartments.
Land prices dip
The housing market in Hanoi continued the trend of offering discounts on the secondary market in Q4/2011.
Some 40 per cent of houses and land that have been completed in new urban areas in 14 districts of Hanoi were offered at a reduced price, ranging from a few million dong to VND10 million per square meter by quarter.
Compared to early 2011, about 70 per cent of the projects had a secondary offering at reduced prices, with the common price cut being 10-40 per cent.
In the near future the market place will depend on the economic recovery, so secondary buyers will still be under the pressure to cut prices, said CBRE.
FDI in real estate lowest in 5 years
While pledged foreign direct investment (FDI) in Vietnam fell 26 prevent year on year to $14.7 billion in 2011,FDI in the real estate sector declined much more sharply, to around $852.6 million, plunging 72.3 per cent compared to the peak of $23.6 billion in 2008.
The prospect for FDI in the sector in the future remains gloomy, said Nguyen Minh Tuan, Deputy Director of CBRE.
As the US economy has yet to escape recession and the fate of the EU is still unknown, global cash flows are still very scarce, so capital flows into Vietnam’s real estate sector are likely to see a decrease, he added .
"Prices increasingly reflect the actual supply and demand. Now, the tension between the seller and the buyer continues.”
“So, projects for which the investors have the financial resources, and completed on time as committed, will maintain the confidence of buyers and will probably have more transactions starting Q3 of 2012 " he said.
Total outstanding loans for the real estate sector as of December 2011 are around VND203.6 trillion, of which non-performing loans account for about 4.14 per cent, or about VND8,400 trillion, according to the Ministry of Construction.
The rates represented a year-on-year decrease of 13.46 per cent, accounting for 9.25 per cent of total outstanding debt of the whole Vietnamese banking system.
Of the total outstanding loans to real estate, short-term loans were VND40.89 trillion, while medium and long term loans were VND162.7 trillion, accounting for 2008 per cent and 79.92 per cent, respectively.
Outstanding loans secured by assets accounted for about 97 per cent, while loans without collateral account for 3 per cent.
Outstanding loans for the real estate sector decreased by around VND31 trillion year on year, said the ministry.