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VND500mil-1bil apartments still salable: MOC
The Ministry of Construction’s House Management Department Director Nguyen Manh Ha said that though the real estate market has become gloomier, low-cost apartments and houses valued at VND500mil-1bil are still selling well.
The apartment market has cooled down after the hot year 2007 with prices down by 40% in HCM City and 15-25% in Hanoi. How have the price decreases been affecting the real estate market?
In principle, the price decreases will not encourage investments, which will affect the supply. However, the segment of low-cost apartments worth VND500mil to VND1bil still has good potentials. The prices of these apartments have not decreased considerably. Investors are now putting their money into the projects the market needs.
In fact, the biggest price decreases have occurred in the luxury apartment market. The prices of luxury apartments previously were pushed up to overly high prices, higher than their actual values. The prices of luxury apartments were the ‘virtual’ prices, decided by speculation deals.
What percent of the demand for housing has been satisfied so far?
The demand remains very high, while the supply remains short.
Currently, the projects on urban apartments provide 25-27mil sq m of houses every year. However, every person in urban areas has 11 sq m of accommodation, and the ratio is expected to increase to 14 sq m per person by 2010. This means that it is necessary to have 22mil sq m more a year to meet the demand of 22mil people living in urban areas.
Foreign investors are now ready to jump into the real estate market while domestic investors are facing difficulties in capital arrangement due to the monetary tightening policy. However, they may be discouraged to do that due to the complicated problems in procedures and site clearance. How will the problems be settled in the time to come?
The lack of transparency and complicated procedures remain the big problems for investors. However, the most important factors investors will consider when making investment decisions are the incomes of people and the country’s financial capability in its housing development policy.
In fact, we have not paid appropriate attention to diversifying types of houses, especially houses for lease. We do not have a house leasing market. Though well realising the demand for houses for lease is very big, investors, including capable foreign investors, still do not find it profitable to run projects on houses for lease. It is because investors cannot get capital back for a long time.
Real estate experts have forecast that the real estate market will de-freeze in 2010. What is your personal opinion?
Vietnam’s real estate market still has a lot of potentials as the demand is very big, especially the demand for accommodation, offices, industrial workshop premises. Vietnam has the urbanisation ratio of 27%, while the ratio is 70% in developed countries. Singapore has the ratio of nearly 100%.
By 2020, when Vietnam expects to be an industrialised country, the urbanisation ratio will be 40-50%.
VNN
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