Expat demand limited to upscale apartments

Proposed regulations allowing foreigners to buy property will have minimal impact on Vietnam’s property market, with demand expected to be limited to high-end apartments, an official said at a meeting in Hanoi Thursday.

The regulation on foreign home ownership, drafted by the Ministry of Construction, will be submitted to the National Assembly for approval next month.

With only a small number of foreigners becoming eligible to buy apartments under the new regulation, the impact on property prices would be limited, said Nguyen Manh Ha, head of the ministry’s House Management Bureau.

Only about 10,000 foreigners will become eligible to buy apartments under the proposed new regulation and Ha said demand from this groupwas expected to be focused on upscale apartments.

To prevent home purchases for commercial purposes, the draft regulation states a foreigner who buys an apartment will only be allowed to sell the property after holding the ownership certificate for one year, the ministry said.

Eligible foreigners will be allowed to own apartments for 70 years under the proposed new regulation.

At Thursday’s meeting with the National Assembly’s Economic Committee, the Construction Ministry said about 80,000 foreigners now lived in Vietnam.

Of this group, about 25,000 people work in the country in investment projects.

Foreigners now rent more than 1,300 houses and apartments in Hanoi and 4,000 residences in Ho Chi Minh City.

GROUPS ELIGIBLE TO BUY APARTMENTS INCLUDE:

■ Heads of diplomatic corps and chief representatives of international organizations in Vietnam;

■ Foreigners who invest directly in Vietnam;

■ Foreigners who receive the President’s or Government’s certificates of merit or medals for their contribution to the country;

■ Foreign cultural activists and scientists who are working in Vietnam;

■ Foreigners who are married to Vietnamese residents and live in Vietnam;

■ Foreigners who are granted the title of honorary citizen of Vietnam by the President; and

■ Foreign-invested enterprises operating in Vietnam, excluding those operating in the real estate sector, who will be allowed to buy homes to lease to foreign employees.

Real estate market to remain lackluster for 1.5 more years: experts

16:52' 11/04/2008 (GMT+7)

VietNamNet Bridge – The real estate market shows signs of falling down as a result of the monetary policies and anxiety about the stability of the local currency.
Prof Dr Dang Hung Vo, former Deputy Minister of Natural Resources and the Environment, now head of the chair of land under Hanoi National University, said that in fact, policy makers want to recover the real estate market, but commercial banks are trying to tighten real estate credit by raising lending interest rates to overly high levels due to lack of cash.
“The lack of capital will continue putting difficulties on real estate and stock markets, which need investments, for 1.5 more years at least,” Vo said.
Dr Dinh Duc Sinh from the Real Estate Business Association is optimistic about the real estate market, but thinks that the market will continue falling for a long period more, and the time of recovery will depend on the effects of the government’s measures to curb inflation.
Le Xuan Truong, consultancy expert with B.D.S real estate firm, said that in Hanoi, the prices of houses and apartments have dropped by 20-30%; especially, the prices of luxury apartments have plunged by 40%. A 182 sq m apartment at Ciputra now has the contract price of $120,000 instead of $175,000 as several months ago.
According to B.D.S, transactions now are 1/10 of last month. “Clients come to real estate trading centres only to ‘explore the situation’; they aren’t spending money at this moment,” Truong said.



He added that the successful transactions at this moment are the ones which have the value of less than VND1bil. These people are making transactions at this moment because they have real demand for accommodations. Those who do not really want accommodations at this moment have delayed their purchases, hoping that the prices will go down further.



Also according to Truong, the prices of land and houses in the centre of Ha Dong city in Ha Tay province are decreasing sharply. Meanwhile, the prices of the land plots in some districts of Ha Tay province are increasing as the areas are thought will become a part of Hanoi in the future.



Vo said that what is happening now in the market shows that the overly high prices several months ago were the result of speculation. He said that if relevant ministries and branches strictly follow the government’s instructions, the real estate market will be more stable, and those who really need to buy houses for accommodation will have opportunities.



(Source: Tien phong)

Real estate prices down to real value

16:57' 08/04/2008 (GMT+7)

VietNamNet Bridge – The government’s efforts to force real estate prices down have shown effects: prices are expected to keep decreasing by 30-40% until August.
Prices down, speculators incurring losses
Before Tet, Minh, a securities investor on ACBS trading floor, got VND10bil from stock sales and he used the sum of money to buy two land plots at Him Lam-Kenh Te projects, two blocks of apartments in district 7, near Phu My Hung urban area.
One week after that, the prices skyrocketed by 10%, which would have brought fat profit to him if he had re-sold the land plots and apartments. However, Minh did not sell them, hoping to earn fatter profit when the price went up further.
Minh seemed to make the wrong move with his properties. As the prices have been falling down for one month, he has incurred the loss of VND2bil.
Mai Van Chung, a real estate broker in district 9, HCM City, said that speculators and brokers are now suffering. Chung related that he earned 2% of commission for every successful deal. However, sometimes he decided to spend money to buy land and houses in the hope of getting fatter profit than commission. And now he has an apartment left unsold, which he bought for VND2.5bil.
An officer of the Mai Huynh Real Estate Company said that he knew a client who bought apartments of Thai Son 1 project distributed by Mai Huynh at VND25mil/sq m, and re-sold them for VND18mil/sq m.
High-grade apartments under projects in districts 2, 6, 7, Phu My Hung ad Nha Be have been witnessing their prices plunge most sharply. Meanwhile, the prices of land plots under the projects of An Phu-An Khanh, Him Lam-Kenh Te have also dropped from VND55-60,000/sq m to VND40-45mil, down by 25% over the highest peak.
The real estate business circle says that prices will keep going down until August with the expected decrease of 30-40% on average.
However, houses and apartments for medium-income earners, which did not see the ‘price fever’ when the market was hot, now have stable prices.
Apartments in projects in the suburbs of HCM City for medium-income earners, including Le Thanh project in Binh Tan district, Thoi An in district 12 are still selling at VND350-500mil/apartment.
Good news: real estate prices return to real values
Construction and real estate firms all highly applaud the government’s efforts to force real estate prices down, though they said the price decreases have been making a lot of speculators suffer from heavy losses.
Nguyen Phung Thieu, Director of Sai Gon Gia Dinh Real Estate Company, said that as all people injected money in real estate over the last time, real estate had an attack of fever. If the market cannot be cooled down, the real estate bubble will burst, which will be a big danger for the national economy.
Thieu said that the profit of 15-20% would be reasonable for real estate business, like other kinds of business, while overly high prices will threaten the national economy.
Dr Tran Du Lich, Head of the HCM City Economics Institute, said that the price decreases should be seen as active signs, showing that the government’s measures can settle the core problems of the real estate market. The measures have helped bring properties back to their real values without shocking the market.
Lich said that a lot of people may incur losses due to the measures, including speculators, and this will help prevent speculation activities in the future.