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Real estate products selling off, but at… high prices
The real estate sale-off should is not a big problem to the national economy at all, and no need to worry about the fate of banks and real estate developers, said Professor Dang Hung Vo, former Deputy Minister of Natural Resources and the Environment, who is now considered the leading real estate expert in Vietnam.
Real estate sell-off wave raised
The sell-off waved has been raised after the sharp 35 percent price reduction was announced for Petro Vietnam Landmark project. What would you comment about that?
The real estate price reductions in HCM City prove to be inevitable, because real estate developers need money to pay bank debts. Some people believe that this is just a “trick” played by the investor to mobilize capital from the public. But I think we still need to make thorough consideration before making conclusions. Nevertheless, it would be a quite normal thing if investors have to cut down the sale prices to boost sale to get money back for debt payment.
People believe that the real estate prices have become too low and bottomed out. As you may know, some real estate projects on Le Van Luong Road in Hanoi have seen the prices down by 2-3 million dong per square meter. Meanwhile, in HCM City, the sharp fall of 3.5 million dong per square meter has been announced for Saigon Mekong project’s apartments. What would you say about the price levels?
I know some projects whose price has plummeted from 26 million dong to 16 million dong per square meter. However, I still do not think that these are the sharp falls and the real estate prices are now at low levels. I believe that the price of 16 million dong per square meter is still high. The price decreases of 2-3 million dong prove to mean nothing.
You should not be worried that the price decreases would make the real estate market collapse. The real estate prices still need to go down further, which needs to truly reflect the real value
What will come next after a lot of insolvency cases and sale-offs?
In the last months of the year, real estate developers may join forces with other investors to arrange capital and pay debts. They may transfer projects, do merger and acquisition, or reduce prices to boost sale.
This would lead to the sharp price decreases, while real estate developers can sell more products, and more people can buy houses and apartments. This would have big impacts on the market – good impacts, I think. There always exists a big gap between the real estate price and the actual income of Vietnamese people. Meanwhile, the price reduction means that the gap would be narrowed.
Do you think that some bad influences would occur, I mean, real estate developers would not be able to pay debts, which would lead to the higher percentage of the bad debts at banks?
No need to worry for banks. The report by the central bank shows that the outstanding loans to the real estate sector were less than 10 percent of total outstanding loans, which means that the lending is still within reach. I can say for sure that if the percentage is really lower than 10 percent, nothing bad will occur with banks
How about the steel industry? Steel manufacturers complain that they have been pushed against the wall, because of the frozen real estate market…
In a market economy, it is quite normal to see some making profits and others taking loss. It is necessary to analyze the reasons why steel manufacturers take loss and fall into big difficulties.
I think that we should not blame on frozen real estate market for the problems of the steel industry.
Do you think that it is not good if real estate firms, like all other enterprises, have to bargain away their products?
No need to worry for real estate investors. They have been earning super profits for the last 10 years, and they have to take responsibility for the current market performance.
Pham Huyen
vietnamnet
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