Dramatic changes in pricing strategy

A series of property developers in Hanoi are reducing prices to become eligible for the government safety net in case they fall.

Nearly 10 developers have just launched residential projects in Hanoi at the prices ranging from a low VND13 million ($612) to VND17 million ($817) per square metre in a dramatic change of strategy.

The Dai Thanh residential project in Thanh Tri district, developed by Dien Bien Construction Company No.1, has set the prices at the lowest level of VND10 million or $480 per square metre.

Meanwhile, Viglacera has announced prices for its OCT2 residential building at Xuan Phuong urban project at approximately VND13 million or $612 per square metre. The launching of this residential building with more than 200 apartments will bring more opportunities to medium-income homebuyers in Hanoi.

The price at Sails Tower in Ha Dong district, which is developed by Khai Hung Company, is also announced at around VND16 million or $765 per square metre.

Nguyen Trong Ninh, deputy director at the Ministry of Construction’s Housing and Property Market Management Department, said the market had been more positive after the government announced that apartments of less than 70sqm and prices at less than VND15 million ($721) per square metre would benefit from the government’s rescue package.

According to the Resolution 02/NQ-CP dated January 7, 2013, state-owned commercial banks would provide at least 3 per cent of total credit to homebuyers to buy social housing. At the same time, the corporate income tax imposed on social housing developers might be reduced to 10 per cent to encourage more developers to build social housing.

“Developers understand that they will not be rescued because of their previous business strategies so that they are reducing prices to attract homebuyers,” Ninh said.

Ministry of Finance economist Vu Dinh Anh admitted that the government could not bailout high and medium-end sector. He said if developers wanted to receive bailouts from the government, they had to reduce price to below VND15 million ($721) per square metre.

He added it would be not strange if developers sold apartments lower than construction price to avoid further losses.

vir

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