Experts optimistic of apartments market

Saturday, Aug 30, 2014 11:21

A view of the Sai Dong Urban Area in Ha Noi's Long Bien District. Viet Nam's real estate market is expected to continue its recovery despite challenges. — VNA/VNS Photo Tuan Anh

HA NOI (Biz Hub)— The domestic apartments market is expected to continue recovery by year-end and beyond because of the increasing number of advantages for it in market and state policies, experts said.

Savills Viet Nam, a foreign property consulting service provider, revealed that in the second quarter of 2014, an estimated 1,900 apartment units were sold in the capital city, representing a 54 per cent quarter-on-quarter increase resulting from strong sales in Grade B projects.

The average primary price was approximately VND28 million per square metre, representing a 15 per cent quarter-on-quarter increase.

In HCM City, the overall absorption rate was estimated to be 17 per cent, representing a quarter-on-quarter increase of seven per centage points QoQ and a year-on-year increase of nine per centage points. An estimated 2,500 apartment units were sold, representing a 60 per cent quarter-on-quarter increase and a 115 per cent year-on-year increase.

Real estate traders have continued doing business in the seventh lunar month in spite of the belief about it being an unlucky month for activities such as moving into new homes, getting married and opening new businesses.

A number of companies are offering properties for sale this month, especially low-cost apartments that have attracted customers. These include the Bac Ha Tower of Bac Ha Construction and Trading Joint Stock Company, the CT9 apartment building under the Van Phu Victoria project of Van Phu Investment Joint Stock Company, the Ehome3 project of Danh Khoi A Chau Real Estate Joint Stock Company, and the 8X Plus project of the Hung Thinh Property Company.

The Dien dan Doanh nghiep newspaper quoted property expert Do Minh Duong as saying that a survey on proposed amendments to nine real property laws was conducted at a meeting of the National Assembly Standing Committee this month.

The National Assembly is expected to approve the amendments to such laws as the Investment Law, Enterprise Law and Housing Law.

Also, the Prime Minister recently asked the Ministry of Natural Resources and Environment and concerned ministries and sectors to implement land administration reform, Duong added.

"These are factors that have a direct effect on the domestic real estate market. If the state implements these reforms, they will have a positive effect on the market and boost the confidence of investors and customers who want to purchase property," the expert said.

Property experts agree that Viet Nam's real estate market will recover further, though a number of challenges remain as a result of high market demand, market recovery following a recession and active monitoring of the market by investors.

In previous years, domestic demand for real property remained high, resulting in a significant number of successful transactions in the property market.

Based on official figures, Viet Nam has an average housing area of 25 sq. metres per capita and needs 2.5 billion sq. metres of housing area for an estimated total population of 100 million by 2020. The nation now has 1.4 billion sq. metres of housing area and needs 100 million sq. metres more per year for the construction of new houses and apartments.

In previous years, land area for housing and apartment construction reached 80 million sq. metres.

Therefore, demand for housing and apartment construction remained high, and enterprises should maximise every opportunity to develop property to meet market demand, Duong said.

Experts noted that in Viet Nam and the rest of the world, the property market followed a cycle of development and recession, with each cycle lasting five years.

Viet Nam experienced recession in its property market from 2009 to 2013, when leasing and selling prices for property were reduced. But, recently, the property market had been experiencing a resurgence amid positive signals such as the reduction in interest rates for loans on real property and high demand for certain kinds of real estate.

Experts also noted that domestic and foreign and investors had become more active in monitoring developments in the real estate market.

Figures from the Ministry of Planning and Investment showed that the country attracted US$5.7 billion in disbursed foreign direct investments (FDI) in the first half of the year, showing a one per cent increase year-on-year. FDI poured into the property sector accounted for approximately 10 per cent of the total, mainly through merger and acquisition (M&A) activities.

Savill Viet Nam said M&A activities in Viet Nam's real estate sector were expected to continue surging, given the perception that the country remained one of the most promising growth markets.

The Trans Pacific Partnership Agreement should be signed soon and would support the growth of the national economy and increase FDI flows into Viet Nam, Savill said.

"The New Land Law, which took effect last July 1, allows foreign-invested enterprises to be allocated land for residential housing projects. This regulation amendment is expected to ensure transparency and offer equal opportunities to local and foreign investors, making Viet Nam's real estate market more attractive in the eyes of investors," it added.

"The market continues to see residential development projects changing hands, including the apartment sector, landed property sector and township projects. Investors also have a strong appetite for operating assets with stable yields and lower risks," Savill noted

"The interest of Japanese and Korean investors, who have accounted for the majority of M&A activities in the last two years, is expected to remain strong," the property consulting service provider said. "Besides, there is growing demand from Singaporean and Taiwanese groups for both residential and commercial office buildings. There will be continued activity in these sectors over the coming months and in 2015." — VNS

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