Real estate to perk up by year-end

Saturday, Jan 11, 2014 11:56

Appartments buildings along Le Van Luong Street in Ha Noi. The real estate market has passed its most difficult period and a revival could begin at the end of this year. — VNS Photo Thai Ha

HCM CITY (Biz Hub)— The policy of maintaining stability and reasonable economic growth this year is important and appropriate to foster the business (including property) environment, said Vu Viet Ngoan, chairman of the National Financial Supervisory Commission.

Ngoan told members of the HCM City Real Estate Association (HOREA) at a meeting this week that the Government has come out with measures to revive the market, which would have a domino effect.

They included the simplification of administrative procedures and the VND30 trillion (US$1.42 billion) credit package for developers and buyers.

Le Hoang Chau, HOREA chairman, said the difficulties the market faced last year persist and are likely to ease gradually as the economy and foreign exchange rate stabilise, inflation eases, and, especially, disbursement of the VND30 trillion credit is speeded up.

"It (the credit programme) restores developers' confidence in the recovery of the market and offers urban low-income earners a chance to buy dwellings at reasonable prices and reasonable interest rates," he said.

But disbursement has been too slow, at less than 2 per cent, he complained.

He also proposed having a more open policy that allows overseas Vietnamese and foreigners to buy high-end apartments.

According to a report on HCM City's real-estate market in the fourth quarter of 2013 released on Tuesday by property services provider Savills Viet Nam, there were approximately 15,300 units in the primary market, a surge of 2 per cent from the previous quarter and 5 per cent year-on-year.

Seven new projects and new phases of three existing projects brought 2,100 units to the market in the quarter.

Savills Viet Nam also reported an increase in demand on apartments for sale on the Ha Noi property market.

Housing demand at the end of the year typically increases. The total number of units sold this quarter was 46 per cent higher than in the third quarter of 2013. Meanwhile, approximately 2,400 units entered the market this quarter. The total primary stock was approximately 11,500 units, increasing by 15 per cent quarter-on-quarter (QoQ).

The absorption rate was 11 per cent, up 2 percentage points QoQ due to lower prices, fast construction progress, offers of shell packages and a wide range of promotions, said a Savills Viet Nam spokesperson.

The apartment market in Ha Noi has also shown improvement in the last quarter of 2013, according to the fourth quarter report on Ha Noi's property market by the CB Richard Ellis Viet Nam Company (CBRE).

Re-launch activities were very active since developers were more concerned about clearing out outstanding stock than in releasing new products.

Following a record third quarter, the fourth quarter also saw the completion of 7,500 units.

An interesting development during the fourth quarter is the shift in the developers' focus from low-priced products ($1,000 per square metre and below) to mid-priced products ($1,000-$1,500 per square metre).

Unlike previous quarters in which transactions occurred mostly in the low-price range, the last quarter of 2013 saw more transactions at the mid-price level. This is most likely driven by buyers' increasing confidence, which also led to a 50 per cent quarter-on-quarter increase in total transaction volume.

The year 2014 should see many more completed projects and further intensification of competition, with newly launched units. Buyers are now mostly interested in completed or nearly completed units to avoid issues with handover quality and late handovers. High-quality projects will likely see increasing transactions, even though their prices may not necessarily improve.

Truong An Duong, head of research for Savills in HCM City, said the major factors that contributed to the strong performance included firm commitment in construction progress, developer credibility, effective distribution channels, and continuing financial support from developers and banks.

Overseas remittances in 2013 are likely to have been $10.6 billion, up 6 per cent.

Over 59,500 units in 94 projects are expected to be completed from 2014 to 2017, with 81 per cent being completed from 2016 onward.

In the next two quarters over 1,200 units are expected to be hit the market. — VNS

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