Price cutting cuts market down to size

More developers are offering carrots to woo buyers

The property sector is set for some spectacular price cutting. The trend could follow PetroVietnam Power Land Joint Stock Company (PPL) announcing a 35 per cent price discount on apartments to ease financial pressure and repay bank loans.

The company has lowered the price of 85 apartments in its PetroVietnam Landmark project in Ho Chi Minh City’s District 2 to VND15.5 million ($740) from a previous level of VND21.6 million (1,000) per square metre.
The turnover from these apartments, the company claimed, was to repay a VND100 billion ($4.8 billion) loan from Lien Viet Post Joint Stock Commercial Bank, which has to be repaid before November 23.

After the discount, Saigon Mekong announced to reduce price of 500 apartments in District 7 to VND14.5 million, from the initial plan of VND18 million per square metre.

A Saigon Mekong representative confirmed the discount, but refused to comment further.
Meanwhile Vihajico, investor of large-scale Ecopark project near Hanoi mid this year offered a 12 per cent discount on its apartments. Vihajico deputy general director Bui Tien Hung said that the reduction was in response to the government to give under pressure customers some relief.
Other developers are offering special incentives for customers, but not direct discounts.

With the new price of VND14.5 million per square metre, Saigon Mekong’s project has left its neighbouring projects far behind with the gap of VND5 million ($240) per square metre, while PetroVietnam Landmark has only a half price compared to a range of other projects in the area.
Doan Chi Thanh, representative from the Hoang Anh Sai Gon Real Estate Company, said the discounts had shocked the market.

Thanh expected that in the time to come, there would be some more projects to offer discounts to customers, especially projects with long-term sales plans. “Many developers may offer more discounts as there is little love out there,” Thanh said.

Pham Trung Ha, general director of Hoa Phat Land, said most discounts were from sub-investors and this was not a sign for a further real estate market downturn. Meanwhile Nguyen Trung Thanh, a customer in Hanoi, said the discounts showed that real estate developers had been milking it for a long time.

“In realty, the real expense could be at VND8 million per square metre of apartment while developers are selling with more than three times,” Thanh said.