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High-grade apartment oversupply forecast
While existing apartments priced at over $1,000 per square metre are selling very slowly due to low demand, a lot of new projects are still being marketed. Experts have warned that the massive investment in the market segment will lead to oversupply.
A series of high-grade real estate projects in Hanoi and Da Nang have been started or launched onto the market recently.
VinaCapital has announced the sale prices for villas at The Ocean Villas belonging to Danang Beach Resort, which are between $300,000 and several million dollars.
Olalani Resort and Condotel in Da Nang city, which comprises 88 apartments, is offering the apartments for sale at $2,750 per square metre. In Hanoi, there are a lot of high-grade apartments on offer for around $2,000, from Mipec Towers (the prices of which have been announced at $1,850-2,100), Hanoi Sky City Towers ($1,900 at minimum) to those whose prices were announced one year ago, including Keangnam Hanoi Landmark Tower, at $2,400-3,200 per square metre.
According to Nguyen Anh Tuan from Olalani Resort & Condotel project, Olalani has sold 1/3 of total products only (38 out of 88). Only one of three villas has been sold at $2.8 million, while the other two, worth $2.4-2.5 million, still have not found owners.
Meanwhile, Dung Minh from Savills Vietnam, sole representative of Mipec Towers and Keangnam Hanoi Landmark Tower, said that 50 percent of Keangnam’s apartments, which have been open for sale since August 2008, are still free, while nearly 30 percent of Mipec Towers’ apartments are still available.
According to the Ministry of Planning and Investment, Vietnamese income per capita reached $1,000 in 2008. With such an income, a person would only be able to purchase one square metre of house if he did not eat or drink for a year.
Marc Townsend, General Director of CBRE, a real estate consultant and service provider, said that in crisis, instead of purchasing high-grade apartments, people who really have a demand for accommodations are more interested in moderately-priced houses. He said that investors should inject money in high-grade real estate projects only when the national economy recovers and they can see a demand.
Agreeing with this, Nguyen Manh Ha, Senior Official of the Ministry of Construction, has also expressed concerns about the hot development of high-grade apartments recently. He said that the real estate sector in the US has fallen into crisis because of overly hot development, while people’s payment capability is limited.
“When prices are overly high, while people do not have money, this leads to the freezing of the real estate market,” Ha said.
Nguyen Do Viet, Chief Secretariat of Nam Cuong real estate group, said that high-grade products should be developed with a vision for 30-50 years, since these products have a very selective group of customers.
vietnamnet, vneconomy
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