Loosened monetary policy and foreign investment flows may revive the Vietnamese property market this year.
Prices plunge
According to data from Savills Vietnam, a real estate services provider, in 2013, prices of land, villas and townhouses in Ho Chi Minh City dropped 10-11 percent, depending on product ranges. However, the second quarter of 2011 was taken as a landmark, this segment lost a total of 23 percent of value on the secondary market.
According to a survey by Savills Vietnam, in Hanoi, transactions of villas and semi-detached houses remained poor in the fourth quarter of 2013. The average asking prices of the entire villa and semi-detached markets were down 3 percent and 1 percent, respectively. Price in suburbs had deeper reduction than that of the urban. For instance, price in suburban districts of Dan Phuong and Hoai Duc slashed 10 percent while that of central districts of Hai Ba Trung, Tay Ho and Tu Liem suffered only about 2-4 percent reductions.
Price-losing speed in Hanoi has slowed down. “Average secondary prices edged down but became stable in some districts,” said Richard Leech, CEO of CBRE.
The continuous decline in this segment in more than two years was resulted from prolonged real estate crisis, persistent macroeconomic instability and unimproved employment. Many retail investors and project developers were ready to sell out to stop losses, causing a panic flight on the market.
Land and villas remained in the doldrums but cheap apartment segment caught attention last year. Affordable apartments (Class C) in Ho Chi Minh City accounted for about 70 percent of the total 5,800 successful transactions in 2013, according to Savills Vietnam. CBRE Company reported that 6,114 apartments were offered for sale and the supply increased 83.5 percent over the previous year. Particularly, in the fourth quarter, 2,702 units were launched onto the market, of which affordable housing accounted for 56.7 percent.
Improved liquidity of low-cost housing in 2013 resulted from punctual completion of construction, and debt restructured and credit supported by banks, a part from the real estate credit support package of VND30 trillion and the rest from housing loans from banks. This segment also experienced a price downtrend in the fourth quarter of 2013. Affordable apartment prices fell 1.4 percent over the third quarter and fell 6 percent year on year. This sharp decline was attributed to the support of the real estate credit package. In addition, some investors accepted to accelerate low-price apartments to stimulate the demand.
In general, prices kept going down in all segments. However, right at the bottom of the crisis, there were supporting factors for the market recovery: Strong sales of affordable apartments. Villa and land segments will be supported by policies. The Joint Circular No. 20 between the Ministry of Construction and the Ministry of Justice allowed investors to sell land from January 5, 2014 after they complete building infrastructure. In addition, overseas remittances flowing into Vietnam increased 6 percent to US$10.6 billion last year and this huge capital source is expected to revitalise the housing market in the near future.
Vision of foreign investors
Construction Minister Trinh Dinh Dung said the real estate market is making positive changes, especially in the last months of 2013. Currently, as many as 57 projects have registered to be converted from commercial housing to social housing, with a total supply of nearly 35,000 apartment units and a total investment capital of VND20.5 trillion. Up to 62 projects registered to adjust the supply from initial 32,000 apartment units to 40,500 units. This trend will continue in 2014, and thus the amount of low-cost housing market will be quickly absorbed.
According to the Ministry of Construction, real estate inventories tend to decline. At the end of 2013, total inventory value was nearly VND95 trillion, down 26.5 percent from the first quarter of 2013. Apartments with an individual area of less than 70 square metres and a price of under VND15 million per square metre in major cities are sold quite well and are not stockpiled as inventories.
Inventory reduction is an important indicator for the recovery of the market. Housing prices have fallen much from the peak during the 2008 – 2010 overheating period. Minister Dung said most projects slashed prices by 10-30 percent and many projects reduced prices by 50 percent, equivalent to those in 2006.
“I believed that the real estate market would start to revitalise in 2014 given positive development in late 2013,” said Construction Deputy Minister Nguyen Tran Nam.
He added that the market will focus on small and medium-scale apartments with stable prices. The increase in transactions of social housing and small and medium commercial housing will be the leading factors of the market and will spread effects on other segments.
In addition, expected loosened monetary policy in support of economic recovery will bring new vitality to the market and have a very important boost from foreign investors. The Foreign Investment Agency (FIA) under the Ministry of Planning and Investment said the real estate drew US$884.01 million of FDI capital in the first 11 months of 2013, making it the third biggest industry-based recipient of FDI capital.
The rise of FDI capital in the real estate market shows that foreign investors will expect a market recovery. According to Savills Vietnam, property investors from Asia like Japan, South Korea and Singapore are again paying attention to Vietnam. Current investors like Daewoo E&C and Lotte will continue to pour investment capital into their ongoing projects or acquire other projects. This is resulted from the anticipation that Vietnam’s real estate market is at the bottom of the price correction cycle and investors want to catch up opportunities when the economy revives.
Bao Chau
Đăng ký: VietNam News
