Real estate on the way up, says analyst

Customers at the HAGL Land office on Monday. The company has cut the prices for its new Hoang Anh River View apartments in Ho Chi Minh City’s District 2 by 40 percent to US$1,350 per square meter. The Ho Chi Minh City property market has started edging up again after many developers decided to reduce prices to make them more realistic, a top industry executive said.

Le Hoang Chau, chairman of the HCMC Real Estate Association, told Thanh Nien: “I notice there are signs of a recovery. “I expect the market to rise this year, especially after June.” “The good thing is many developers now know they need to balance their profits with buyers’ interest by lowering prices.” HAGL Land on Monday cut the prices for its new Hoang Anh River View apartments in District 2 by 40 percent to US$1,350 per square meter. It also lowered prices at another project in Nha Be District to $1,250 from $1,800 per square meter. Le Hung, director of HAGL Land, said the price cuts are “revolutionary” in the HCMC property market and are in line with government efforts to stimulate the economy. “The large number of customers coming to register for purchases shows there are positive signs for the luxury apartment market,” Hung said. “If prices are reasonable and close to the real value of the property, investors will be attracted again.” Hung said the price cuts were possible because his company had purchased land for the projects at low prices a long time ago and construction material prices have also dropped recently. Though apartment prices have been lowered, the quality would remain the same, he assured. Dang Hong Anh, chairman of Saigon Thuong Tin Real Estate Joint Stock Company, or Sacomreal, an affiliate of the listed Sacombank, said the price cuts at the two HAGL apartment projects, accompanied by the easy credit flows from four banks – BIDV, Vietcombank, Sacombank and Military Bank – have helped lure customers back to the market. The banks lend up to 70 percent of the value of an apartment at an interest rate of 10.5 percent for up to 15 years. HAGL Land and Sacomreal reported more than 300 inquiries for the two projects on Monday with 100 people making deposits. According to Sacomreal, apartment sales at the Orient Apartment project in District 4 have also increased sharply in recent days. Duong Dinh Tuan, a resident of Thu Duc District, said he has booked an apartment in Hoang Anh River View after withdrawing all his savings. He said he thought it is better to invest in real estate since bank interest rates are rather low. Many home buyers said it has become easier to buy apartments because many banks are trying to get credit flowing, offering loans at lower rates. Sacombank General Director Tran Xuan Huy said his bank has earmarked VND3-5 trillion ($172-287 million) for loans for buying and repairing property at flexible interest rates. The State Bank of Vietnam, the central bank, on January 23 cut its benchmark interest rate for a sixth time since October, to 7 percent from 8.5 percent, to head off an economic slowdown. The central bank said in a statement earlier this month that borrowing costs have dropped by 0.5-1.2 percent since December to 10.82-11.52 percent. Lam Van Chuc, chairman of Phuc Duc Real Estate Company, said he thought the property market would not recover until the end of 2010. “But with trading increasing recently, it is likely that the real estate market will recover by mid-year,” he said. “As deposit interest rates are currently at low levels, many people will choose to invest in real estate, including apartments. Even if they cannot earn high profits like before, they can rent out their apartments.” The prices of not only apartments but also land have been cut to their actual value to attract buyers, Chuc added. A director of a real estate company, who wished to remain unnamed, said after Phu My Hung Corporation sold out all 133 units in a new apartment block earlier this year, many developers regained belief in the market and prepared to launch new products. Sacomreal’s Anh said his company would soon begin to sell more than 1,500 luxury apartments in District 7 and begin planning some other new projects, Lao Dong (Labor) newspaper reported. Thu Duc House announced it would unveil a residential project with 260 apartments today. The company said it would give priority to home buyers who have a real need – rather than speculators – and would try to keep prices reasonable. Source: TN, TT