Monday, 07/05/2012 12:54

Property investors increase capital

Many real estate investors recently decided to increase investment capital amidst difficult economic conditions.

The move was deemed unavoidable against increased income costs associated with construction material and human resources, amongst others.

An investor of a project in District 2 of HCM City decided to raise capital by nearly 40 per cent from an initial US$90 million.

The decision was made after three years of operation and in sight of project completion.

The project investor cited high costs of construction materials, human resources and construction services, which increased by about 18-25 per cent, as the main reason for the move.

In the same situation, investors of a project in Ha Noi have poured more money into their project even though it too was close to being finished.

The project is located in Cau Giay District with a total capital of $67 million, which has doubled to $146 million.

Investors have also been forced to change their designs and cut down the scale of their projects.

A report from the Ministry of Planning and Investment's Foreign Investment Agency said that from the beginning of the year to the middle of last month, about 30 projects had asked for permission to increase their capital.

The additional capital was $368 million, the department said.

Director of the Nha Vui Company Nguyen Thu Phong said inflation in construction industry was much higher than the common level, which pushed the industry into difficulties.

The consumer price index (CPI) had been well controlled in the first quarter. However, prices of housing and construction materials as well as human resources had been upped by around 20 per cent, said Phong.

Agreeing with Phong, some experts said investors were under strong pressure because of low liquidity.

They added that capital increases were unavoidable.

It was a very tough decision to increase investment capital in the context of low liquidity and oversupply.

Last month, construction prices reduced month-on-month by 0.44 per cent. However, this reduction has not been strong enough to help the real estate market.

vietnamnews

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