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Hanoi ‘surfers’ stampede in hope of apartment options
Thousands of hopeful visitors crowded the sales office of the Nam Cuong Real Estate Co. on November 2-3 to register for a ‘lucky draw.’ The prizes are the right to buy an apartment at its ‘orginal price.’
Thousands of hopeful visitors crowded the sales office of the Nam Cuong Real Estate Company to register for a ‘lucky draw
The on-line vernacular newspaper VnExpress reports that over 3000 people have registered to ‘make a capital contribution’ to a 300 apartment project in Hanoi’s Duong Noi new urban area. Some people said they took a day off from work to sign up for the lucky draw. Others said they skipped breakfast to be at the real estate company’s office at 5 am.
The so called ‘capital contribution’ is a de facto down payment made by apartment buyers in advance. Technically, developers are not permitted to sell houses or apartments in advance of their construction, so instead they sell the right to buy them in the future. Doing so, the developers can mobilize capital needed to undertake projects, while ‘capital contributors’ can be sure of the right to own the apartments when they are built.
According to Nam Cuong, 900 people will be chosen at random to go to the next round, where the 300 luckiest will be selected and given the right to ‘make a capital contribution’ to the project. These will be permitted to purchase one apartment of the project at its ‘original price’ provided they put down a deposit of 50 million dong (about $2750) and make payments for three years.
The 900 registration forms have been delivered and a drawing will take place on November 4 to choose the 300 luckiest people.
People scramble to purchase options on apartments like this because they expect the prices of the apartments to increase dramatically later when they are sold on the secondary market. The prices set for the Duong Noi flats, which will range in size from 50-200 square metres, are described as very ‘soft’, from $880 to $1200 per square metre.
A lot of speculators see business opportunities in the apartments. Ha Phuong, a bank officer, said that if she wins the right to purchase an apartment, she will resell the option immediately.
The slang term for such speculation in real estate is ‘surfing.’ Deals like this, Phuong says, always bring lucrative profits. One month ago, she pocketed 200 million dong from similar investments in the Duong Noi and Xa La urban areas.
“My small family is living in a 15 square metre room. I hope I can earn 600-800 million dong ‘riding the waves,’ so that I can purchase an apartment for myself,” she said.
Nguyen Do Viet, Deputy Director of Nam Cuong Group, said that this is the first time a real estate company has organized a lucky draw. Viet said that the apartments are attractively priced; in addition to the ‘soft prices’ of some one billion dong (about $56,000) per flat, buyers can stretch out the payments over three years.
Use of a lottery to select people who have the right to purchase apartments is applauded by real estate traders. Never before, they say, has such a selection been carried out transparently. In the past, people could only purchase apartments directly from investors if they had a close relationship with the investors.
Le Duc Hien, deputy head of sales at Viglacera Real Estate, said that transparency is what the real estate market needs now.
“With transparency,” said Hien, “clients will be able to purchase apartments at original prices, while investors will gain prestige in the eyes of people. Real estate developers who can gain customers’ confidence will be the winners in the market.”
The real estate market in the Hanoi area is particularly hot due to short supply. Only a few new apartment projects are being implemented, including FLC Landmark Tower on Le Duc Tho Road, Golden Palace in Ha Dong, and Hemisco in the Xa La new urban area.
According to the CBRE consultancy firm, 8,000 apartments will be offered for sale in 2009 in the Hanoi area, but only 3,000-4,000 apartments will be completed and delivered.
At ACB Realty, Director Nguyen Thanh Canh says all the apartments in the Xa La, Van Khe and Van Phu areas have been sold out by investors. Prospective buyers now must buy the apartments from speculators at the prices hundreds of million dong higher than the original prices.
Flats at C14 apartment bloc, for example, sold out for 20 million dong per square meter one month ago. The same flats are now being resold for 23 to 25 million dong per square meter.
“The prices keep going up so fast it makes one dizzy,” Canh says. “The harder it gets to buy real estate, the more people welcome every new tower development. Then, of course, the Duong Noi new town has just gotten underway; it’s no surprise that the opportunity to buy flats at the ‘original price’ has stirred up such excitement.”
vietnamnet, vneconomy
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