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Ice thawing in apartment market

Updated: 25/7/2014 | 11:58:02 AM
The real estate market, it appears, has been given a new lease of life. Market liquidity has improved significantly, with reduced inventory and increased sales.

Liquidity improved

The latest report of the Ministry of Construction disclosed that the property inventory values had dropped to VND83.5 trillion. This figure represents a decrease of VND45 trillion, or 35 percent if compared with the first quarter of 2013.

Apartments remain the worst sellers, with 17,450 apartments remaining unsold on the market, worth a total of VND26.5 trillion. In HCM City alone has 7,000 unsold apartments, worth VND12 trillion.

However, the figures do mark a considerable improvement in the sales of apartments, as unsold inventory one year ago stood at over 12,600 apartments. At the end of 2012, that figure was more than double current inventory, at 14,500 apartments.

Le Minh Khanh, Marketing and Business Director of Nam Long Investment JSC, affirmed that the market has been warming up over the last five months. Clients with demand for accommodation have been seeking to buy apartments, believing it is the right time to buy and that prices will not decline any further.

Khanh said by May 2014, Nam Long had sold 697 apartments, worth VND362 billion, an increase of 71 percent over the same period of 2013. If counting the booking contracts, sales had increased by 194 percent by the end of May 2014 compared with the same period a year earlier.

Phan Thanh Huy, General Director of Novaland, said with five projects being marketed, the company had sold 2,850 apartments by the end of May.

Novaland’s products target young couples who typically have been working for at least five years and have monthly income of over VND20 million. Secondary investors are also its potential clients. About 20-30 percent of the apartments, according to Huy, have been bought by investors.

According to Huy, the margin profit remains modest, at below 10 percent. However, most of the clients are “real buyers” and have genuine ability to pay. In addition, reasonable prices, combined with banks’ diversified programs on funding home purchases, have combined to prompt clients to jump into the market at this time.

A new race kicked off

A real estate developer noted that the situation seemed gloomy in May, when tensions with China arose over its illegally-deployed drilling rig in the East Sea. However, he said the event only had a temporary effect, and that buyers have since calmed down and begun seeking to purchase houses.

Therefore, he believes that now is the right time for real estate developers to start new projects.

Khanh from Nam Long said his firm would kick off EHome 6 and EHome 7 in the fourth quarter of 2014.

A representative of Novaland has revealed that the company’s new products will also hit the market soon.

Savills Vietnam, a real estate service provider, has predicted that HCM City will have an additional 1,700 apartments available in the market by the second or third quarter of the year. It has also forecast that in the period of 2015-2017, about 58,600 apartments of 92 projects will be completed. Nineteen percent of them will be marketed by 2015.

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