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City set for property boom, say analysts
With the securities market remaining on an uptick, analysts expect large volumes of money to find their way from stocks to property, sparking off a new "land fever" in HCM City.
Last week the HCM City Stock Exchange’s VN-Index edged above the 500-point mark for the first time this year, chalking up a weekly gain of 6.45 per cent to close on Friday at 509.59.
The rapid increase has meant investors have been pouring large sums into the stock market. Last week volumes hit record highs and a daily average of over 66.4 million stocks. Trading values averaged VND2.5 trillion (US$140.4 million), an increase of 44.4 per cent over the previous week.
Many analysts expect investors to book profits by August and enter the real estate market to spread their risks.
Luong Tri Thin, general director of Dat Xanh Real Estate Company, predicted a sharp increase in the number of property transactions soon.
Many people book profits in the stock market would invest in the property market and some would choose other asset classes like gold, he said.
Bui Tien Thang, deputy general director of the Sai Gon Thuong Tin Real Estate Joint Stock Company (Sacomreal), concurred with him.
Similar signs
Doan Nguyen Duc, chairman of the Hoang Anh Gia Lai Group, said the market showed similar signs to 2007.
"In 2007, share prices rose first and then property prices," he recalled.
But there may not be a repeat of 2007 — when property prices climbed up virtually in a straight line — since many investors learnt lessons from last year’s recession and remain wary, he said.
Though a significant amount of money is yet to flow from the securities to the real estate market, property prices in many districts in HCM City have risen by 20 to 40 per cent, even doubling in some places from late 2008.
At Sai Gon South, prices are rising virtually every day; since mid-May, they are up 20-30 per cent.
In early May, land prices at the Trung Son Residential Area in Sai Gon South stood at VND30-40 million for a square metre but are now up by VND10 million.
At the Him Lam-Kenh Te residential project in District 8, land costs VND50 million a square metre, around 70 per cent higher since January.
At the Thai Son project No 1 in Nha Be District, the price also jumped from VND11 million to VND14 million a square metre in the last month.
The price of apartments at Blooming Park in District 2 have risen from $1,650 when they first went on sale in April to $1,750 now.
Developed by the Kien A Investment & Services Ltd, the project has four blocks with 700 luxury apartments, restaurants, a golf course, park, and international schools. Construction is scheduled to be completed in November 2011.
Analyst also attribute the rise in prices to other reasons like the Government’s stimulus package and a fresh fear of inflation, which is encouraging both small and big investors to hedge the risk by investing in property.
VNS
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