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Real estate warming up, expected to get hot
Commenting that the real estate market has warmed up again, Richard Leech, Managing Director of CB Richard Ellis Vietnam (CBRE), believes that there will not be sharp decreases in real estate prices in the time to come.
He said in an interview with Thoi bao Kinh te Vietnam that the Hanoi real estate market started the 2009 year with many good factors, including decreasing construction costs, while supply will increase considerably in 2009 and 2010.
Construction costs decreased continuously in the first quarter of the year, while the lending interest rates have been staying at low levels, both of which have created favourable conditions for the resumption of real estate projects.
Several big projects, including Keangnam Hanoi Landmark Tower, have seen their foundations completed, while the two big office buildings of BIDV and Capital Tower are past the construction phrase and are believed will be ready for operation by the end of the year.
Leasing fees and sale prices have been decreasing significantly, and the decreases, according to Mr Leech, are not good news for everyone, but prove to be necessary to help push the market up.
In the first months of the year, the sale prices of luxury, high-grade and medium-grade projects decreased by 4-8%, while the sharper decreases of 20-30% occurred with some projects. However, as there have been no sharp increases in supply, CBRE believes that there won’t be sharp price decreases in near future.
Mid-range houses prove to be the only market segment that has seen prices increase. The prices of the products have increased by 5-15%. More and more people have been seeking accommodations, while more people are ready to put deposits down to purchase houses.
Mr Leech does not think that the warming of the real estate market now is temporary. CBRE believes that the market has warmed up and will get hot, as investors nowadays understand the market better and can better satisfy market demand. Foreign investment keeps flowing into the real estate sector.
In the context of the global financial crisis, Vietnam is considered a safe country, with its economic growth rate in Q1 reaching 3.1%, though this is its lowest growth rate since 1990.
As the world’s economy has been struggling to survive the economic recession, any positive growth should be considered a positive sign.
In the current economic difficulties, most multi-national groups have had to delay business expansion plans and cut expenses. However, the groups themselves are still optimistic about the long-term development potential of Vietnam.
Mr Leech said that Vietnam remains an attractive investment destination in Asia.
Vietnam is a country with a young population, while the demand for accommodations proves to be very big. Economic policies, decreasing interest rates and construction costs all have helped the real estate market overcome difficulties and develop.
When asked if a real estate bubble could occur as people are rushing to inject money in the market as the foreign currency and gold markets have become less attractive as investment channels, Mr Leech said that a bubble will not occur as buyers have become more cautious with transactions. State management agencies have been making every effort to regulate the real estate market and try to make it more transparent.
It is expected that there will be some 20 housing projects with 3,000 apartments launched onto the market this year.
VietNamNet, TBKTVN
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