While the Ministry of Construction (MOC) has said that the real estate market has warmed up, reports from market survey companies show that supply is still far higher than demand.
CBRE Vietnam, a real estate service provider, in its latest report, said the office-for-lease market remained gloomy in the second quarter of the year with the supply much higher than demand and average rents down.
The rent has dropped to $21.8 per square meter per month on average. The A-class office building rent saw a 3.2 percent decrease compared with the first quarter, while B-class buildings saw a slighter decrease of 0.4 percent.
Both the A- and B-class offices witnessed unoccupied rates up by 23.1 percent and 34 percent, respectively, compared with the first quarter.
CBRE Vietnam believes that projects in the western part of Hanoi would see further sharp decreases in prices due to oversupply at present and in the near future.
The average rents are expected to go down further, while the unoccupied rate would go up once new products are marketed.
As for the retail premises market, CBRE Vietnam said there was no new supply in Hanoi in the second quarter.
The supplied retail premises area was unchanged at 602,938 square meters, which included 20 shopping malls, two general department stores and eight commercial lobbies.
Earlier, Hanoi Mayor Nguyen The Thao said the high property inventory in Hanoi was still a serious problem.
He recommended credit support policies so that stock could be cleared.
“Hanoi needs policies which can make houses and apartments affordable to people,” Thao said.
“This can be done through credit policy – guaranteeing people’s loans, offering preferential loan interest rates, or offering deferred payments for those with financial difficulties,” he said.
“There should be a policy for lease-purchase,” he added. “If customers can lease houses and apartments, they would get rents high enough to buy houses and apartments.”
Noting that low demand is the biggest problem, Thao said that if demand continues to be weak, the market would remain frozen.
Thao’s and CBRE’s comments are contrary to a Ministry of Construction report that says the real estate market warmed up following a series of measures to stimulate demand taken by management agencies.
Local newspapers quoted Minister of Construction Trinh Dinh Dung as saying that the real estate market in the first half of 2014 showed signs of recovery and it was not as bad as many people had thought.
Dung said that although only a small percentage of the VND30 trillion bailout has been disbursed so far, the market had improved.
“Reasonable policies have helped improve the situation,” he said.
Real estate prices have dropped by up to 50 percent to the 2006 price level.