Property trading floors mushroom

Real estate companies are rushing to establish trading floors as organizations and individuals dealing in property will have to carry out transactions through a trading floor as of next year according to the Law on Real Estate Trading.

The ACB Real Estate Trading Floor in Ho Chi Minh City (Photo: SGGP)

Most companies that have established trading floors are realty investors and dealers, who want to advertise their projects and businesses through their own floors.

Those who already own brokerages have now changed their corporate name and are offering new services, including marketing property from southern Vietnam in the north, around-the-clock consulting on toll free lines, and receiving information through SMS.

The ACB Real Estate Supermarket, which has been a familiar destination for property traders, has been renamed ACB Real Estate Trading Floor in an attempt to renew its image.

According to the law, trading floors must be set up by legal entities that deal in real estate. Apart from buying and selling, trading floors are entitled to provide services, including evaluation, consultancy and property management.

Real-estate firms must publicize information about their projects or properties on real-estate trading floors on least seven days before the projects or properties are listed.

An official from the Ministry of Construction said trading floors will be licensed properly complying with the law.

Property must be traded through approved channels in order to enhance transparency in the market, improve market access, and protect customers, he said.

Nguyen Manh Ha, head of the Ministry’s House Management Department, said companies have to be transparent in providing full information on their projects and dealers have to fully understand the projects’ legality so as to advise buyers accurately.

As of next year, the law also requires all property brokers to hold professional certification.

By Luong Thien – Translated by Minh Anh

Survey shows city remains lucrative for realty investors

Vietnam’s economic hub HCMC remains a destination of choice for real estate developers as showed in the Emerging Trends in Real Estate Asia Pacific 2009 report released by the U.S-based Urban Land Institute (ULI) and PricewaterhouseCoopers.

“HCMC continues to be an area of interest regarding development, ranking second behind Bangalore (India),” says the survey, which was made based on the opinions of internationally-renowned real estate professionals, including investors, developers, lenders, brokers and consultants.

Industry experts have a reason to place HCMC above Mumbai, New Delhi, Hong Kong, Singapore, Shanghai, Tokyo, Kuala Lumpur in terms of development prospects as this city is in dire need of property development to support the country’s growth.

The survey ranks HCMC as the best place for development prospects in Asia Pacific in the three development categories of office, retail and residential rental property, with respondents’ recommendations accounting for 49%, 51.1% and 36.6% respectively.

Recent months have seen retail giants from the United Kingdom and elsewhere come to explore opportunities as Vietnam will open up the market to foreign companies from 2009 under its commitment to the World Trade Organization.

HCMC still needs many more offices and residential rental apartments to quench the thirst of companies, particularly multinationals. Property managers pointed out the shortage of supply has pushed rentals higher than in regional cities including Bangkok.

The survey respondents also cast 47.8% of their votes for HCMC as the second best place in Asia Pacific for industrial/distribution property and 42.9% as the third place for hotel property when comparing the current stock with the growth potential of these industries.

HCMC had struggled with a serious lack of hotels, especially the luxury properties before the global tourism downturn months ago, and soaring room tariff was the result of this.

Despite a drop in the average room occupancy, a recent survey by the property services firm Savills Vietnam puts room tariff of 5-star hotels at nearly US$158 per day, 4-star hotels at more than US$100 and 3-star hotels at over US$63 in the third quarter of 2008.

According to the Hotel Department under the Vietnam National Administration of Tourism, the average room tariff in the country is still 10-15% higher than in some regional markets. Tourism officials said the country would need more hotel rooms to support tourism growth.

Therefore, many of the survey respondents named HCMC as one of the attractive places for development prospects not only in the hotel property but also in other fields of real estate.

“The survey results show that HCMC continues to be a market of immense interest to property developers and investors. The opportunities are evident to all,” said David Fitzgerald, who is HCMC-based tax partner and real estate industry expert of PricewaterhouseCoopers Vietnam.

“Development opportunities are going to continue to be key,” Fitzgerald said. He explained in a statement sent to the Daily that the report highlighted the interest from investors in buying properties in all sectors, but they were hindered by the limited supply of stock.

Fitzgerald said 2009 would be a challenging year with access to credit likely to be a key obstacle. However, he noted that developers that are able to take a long term view and have access to cash are likely to consider HCMC for new projects.

“Overall, the city seems to remain on radar for both investment and development capital,” according to the survey.

(Source: SGT)

Real estate market: the time of recovery remains unclear

Real estate market: the time of recovery remains unclear

90% of polled real estate experts in the survey conducted by VietRees, a real estate research and consultancy firm, said that they have confidence in the recovery and strong development of the real estate market in the future.
However, 70% of experts said that they cannot say anything exactly about the moment of market recovery, adding that the market development depends on many factors which make it difficult to make forecasts.The result of the survey has been released after VietRees considered the opinions of 33 leading real estate experts who are working for state management agencies, high ranking leaders of big real estate groups, and companies.The survey aims to define the confidence by people in the potentials of market development in the future.In fact, some experts still believed that the real estate market does not have any major problems, and that in the time to come, the market’s performance will depend on the stability of the financial market and the national economy.100% of experts think that the market is facing a lot of difficulties, but 90% of them said they will keep optimistic about the future of the market. 30% of experts think that the market will recover in 2009 or 2010.The experts have every reason to believe in the bright future of the market. Le Hoang Chau, Chairman of the Vietnam Real Estate Association, said that even in the difficult period of the market, some segments still can see robust development, saying that the supply of apartments and offices for lease still cannot meet the demand.Jean Chretien, former Canadian Prime Minister, now advisor to ACDL-Asian Coast Development Ltd., also said that the difficulties now in the real estate market are just temporary. He said that Vietnam’s real estate market remains full of potentials, which has been attracting foreign investors.Don Lam, Director of VinaCapital investment fund, said that there remain large potentials with medium-class apartments. Vietnam has a large percentage of young people in the population, and Vietnamese couples do not want to live together with their parents and need separate accommodations. An apartment, which is selling at US $1,200/sq m, may increase to US $1,400/sq m due to the short supply.Nguyen Hong Quan, Minister of Construction said that the demand has always been higher than the supply, and the supply-demand imbalance will last in the future due to the rapid urbanization. In order to have 20 sq m of accommodation per capita by 2020, Vietnam needs to have 35 million square metres more a year in urban areas.

VET

HR drives real estate development

HR drives real estate development

As of January 1, 2009, anyone working in real estate will need a licence. Dr Tran Hien from the Viet Nam Construction Association spoke to Hai Quan (Customs) newspaper about the low quality of human resources.
Some people have complained that staff shortage is not a problem in real estate, but that quality staff are certainly in dire need. What do you think about this?
We should understand this in broader terms, that human resources include architects and engineers charged with land investigation, design, construction and maintenance, as well as those involved in investment analysis and market support services.
I think the weakest links are the experts in valuation and intermediary services.
In my opinion the future of real estate businesses depends very much on these people.
I believe that’s why anyone looking to work in the sector must have a work llcence starting next year. But so far, has the Ministry of Construction completed the framework of the training programme for real estate mediators, appraisers or managers?
Some universities have offered courses in real estate and land administration to undergraduates, but the textbooks are insufficient.
I have to concede that most teaching materials have been imported and translated into Vietnamese.
In addition, they are still in the trial process.
That’s not all. Foreign textbooks are only appropriated in their countries of origin, with a strong real estate legal system. Viet Nam’s is still developing.
The mushrooming of training estabishments for people wanting certification in real estate will actually have a negative impact on the sector’s development due to low quality of training.
According to statistics by the Ministry of Construction, there were 55 training estabishments nationwide this year compared to 31 units in 2007.
Each course is less than two months, and the fees vary from VND 2-5 million (US$120–310).
If university students want to study real estate, it usually takes four years, with two years majoring in real estate’s special disciplines.
According to Decree 153 and the Business Law, an educational background is not required for applicants seeking certification as a real estate mediator. Those who seek certification as valuators must have graduated from secondary vocational schools. What do you think about these legal requirements?
In other countries, to work as a mediator or a valuator, that person must have completed secondary school, deposit a certain amount of money for professional insurance and receive certification by an authorised agency.
However, in countries like Poland, Russia, Germany and some others, to become a professional mediator, he/she must practise as a trainee with a real estate company from six-24 months and then pass a national test.
For Viet Nam I think we should learn from other countries.
Whatever we plan to do, it should be for the client’s benefit. — VNS

New valuation system to bring tax torment for some

Ho Chi Minh City residents will be burdened with higher land tax bills next year after the goverment decided to charge more for the city's improved infrastructure.

Property valuations in some districts of Ho Chi Minh City will more than double next year under a new land valuation system proposed by the municipal government.

The HCMC People's Committee has recently submitted a proposal to the city legislature to have land valuations on 1,899 streets adjusted for the new year. The city has 2,740 streets.

If passed by the city People's Council, the new land valuation system will come into effect on January 1,2009. But residents in some parts of the city will be hit much harder than others - with the new land valuations ranging from VND110,000 (US$6.50) per square meter to VND81 million ($4,800) per square meter.

Downtown Dong Khoi, Nguyen Hue and Le Loi streets will have the highest land valuations of VND81 million per square meter, 20 percent higher than the current valuation of VND67.5 million ($4,000) a square meter.

Land in Thieng Lieng Residential Area on the city's outskirts will be valued at the lowest rate of VND110,000 per square meter.

Under the proposal, land values in District 2 increase the most - more than double the current rate. A member of the appointed board responsible for land price adjustments said current land values in District 2 were far too low.

Huynh Cong Hung, deputy head of the Economic and Budget Committee under the city People's Council, said the increase was reasonable since a lot of money had been invested in the district's infrastructure this year.

Many traffic projects will be completed over the next couple of years, which will make the district more accessible, Hung said.

According to the city People's Committee, Phu My Bridge will open to traffic at the end of next year, linking districts 2 and 7. Work on arterial roads to the Thu Thiem Bridge, which opened early this year to connect Binh Thanh District and District 2, will also be finalized next year.

Land values in District 7 and Binh Thanh District, where infrastructure has also been improved, are also set to rise by 50-100 percent. In inner-city districts, including 1, 3 and 5, land valuations will rise by between 30 and 50 percent.

The lowest increase in land values, of less than 10 percent, will be in Go Vap, Tan Phu, Binh Thanh, Binh Chanh, Cu Chi and Nha Be districts.

The proposed new valuation system caught the local real estate market by surprise. With the market losing steam since the beginning of this year, land prices have in fact fallen sharply since last year.

But members of the board responsible for land valuation adjustments said they had hired an assessing company to survey land prices over the city before making their decision.

Although the property market had stalled, the value of city land had increased because of the new infrastructure, they said.

Nguyen Thi Cam, deputy director of Dat Luat Law Firm, said she expected the proposed higher land valuations would flow into the property market, possibly increasing selling prices in some areas.

Land valuations set by the city administration every year since 2005 are mainly used for tax purposes. The proposed increase means residents will have to pay higher land use taxes.

A resident in District 7, who did not wish to be named, said he had a land use tax bill of VND70 million ($4,150), dating back to 2007. If land valuations in the district increase as proposed, his bill will balloon to VND150 million ($8,890).

Analysts said the proposed increase may encourage sellers to avoid properly registering property transactions.

Source: Thanh Nien News

Real estate market: the time of recovery remains unclear

90% of polled real estate experts in the survey conducted by VietRees, a real estate research and consultancy firm, said that they have confidence in the recovery and strong development of the real estate market in the future.

However, 70% of experts said that they cannot say anything exactly about the moment of market recovery, adding that the market development depends on many factors which make it difficult to make forecasts.

The result of the survey has been released after VietRees considered the opinions of 33 leading real estate experts who are working for state management agencies, high ranking leaders of big real estate groups, and companies.

The survey aims to define the confidence by people in the potentials of market development in the future.

In fact, some experts still believed that the real estate market does not have any major problems, and that in the time to come, the market’s performance will depend on the stability of the financial market and the national economy.

100% of experts think that the market is facing a lot of difficulties, but 90% of them said they will keep optimistic about the future of the market. 30% of experts think that the market will recover in 2009 or 2010.

The experts have every reason to believe in the bright future of the market. Le Hoang Chau, Chairman of the Vietnam Real Estate Association, said that even in the difficult period of the market, some segments still can see robust development, saying that the supply of apartments and offices for lease still cannot meet the demand.

Jean Chretien, former Canadian Prime Minister, now advisor to ACDL-Asian Coast Development Ltd., also said that the difficulties now in the real estate market are just temporary. He said that Vietnam’s real estate market remains full of potentials, which has been attracting foreign investors.

Don Lam, Director of VinaCapital investment fund, said that there remain large potentials with medium-class apartments. Vietnam has a large percentage of young people in the population, and Vietnamese couples do not want to live together with their parents and need separate accommodations. An apartment, which is selling at US$1,200/sq m, may increase to US$1,400/sq m due to the short supply.

Nguyen Hong Quan, Minister of Construction said that the demand has always been higher than the supply, and the supply-demand imbalance will last in the future due to the rapid urbanization. In order to have 20 sq m of accommodation per capita by 2020, Vietnam needs to have 35 million square metres more a year in urban areas.

Source: Vietnam Net

Real estate market: slow restart will cause commodity shortage

The prices of construction material have decreased, bank interest rates have decreased, while real estate credit has resumed. Experts say that now is the right time for real estate projects to kick start again, if not, the market will lack commodities in one or two years.

Let’s go

Most recently, a joint venture of four construction and investment corporations officially kicked-off the construction of a complex of high-rise apartments and services located in Dong Nam, the new urban area on Tran Duy Hung street, in Hanoi.

The construction of such a big complex, with 530 apartments and nearly 30,000 sq. m. of offices, has been drawing special attention from the public recently. Experts say that now is the right time for investors to restart real estate projects after a long period of hibernation.

Prior to that, in the Van Phu new urban area, a real estate project of 2,500 houses was also kicked-off. The investor of the project said that the implementation of the project will still be carried out despite a lot of difficulties in capital mobilization from the public, as the investor does want any more delays.

In new urban areas, like Trung Hoa – Nhan Chinh, My Dinh and Ha Dong Town, a lot of investors have also resumed their projects’ implementation

An official from the Real Estate Association said that it is too early to say that the market has recovered, but the resumption of real estate projects has shown signs of the ‘defrosting’ of the real estate market.

At this moment, investors with big capital will have more advantages than investors who have to rely on bank loans. Though the interest rates have been decreasing, they remain high for investors. Though banks have opened their doors to real estate developers again, investors would still find it difficult to persuade banks to provide large sums of capital.

The market will lack commodities?

Investors believe that it is now the right time for them to kick-off projects, as the prices of construction materials have been decreasing dramatically. The steel price has decreased in half, while the supply of cement has been profuse. Meanwhile, it is foreseeable that the prices of electricity, coal and clean water are expected to increase in the next year, which will affect the construction costs. Therefore, it is considered a wise move to carry out construction right now.

According to Nguyen Quoc Hiep, Deputy Chairman of the Vietnam Contractors’ Association, Vietnam’s real estate market will recover by the end of 2009, before becoming prosperous in 2010. Therefore, now is the right time to speed up real estate projects.

In general, it takes approximately one or two years to implement high-rise building projects. It seems that no big commodity source has been launched into the market in the last year, and if the situation cannot be improved, the lack of commodities is likely to occur in one or two years.

Dang Vy

Vietnam Real Estate Firms Seek Government Help

The government should help boost the property market, which has been in a slump since earlier this year, a bank official said.

Dinh The Hien, an Exim-bank board member, said property is the most common collateral for bank loans, adding it accounts for 80 percent of outstanding loans.

''Without the government’s assistance to boost the market, banks will have to sell off or occupy properties of borrowers who fail to repay debts. [This] will send supply surging, depressing property prices further.''

But Kien Long Bank’s deputy general director Phạm Khắc Khoan said it takes banks three years to complete the procedures required to dispose of a property.' 'Properties that are in demand should be sold first,'' he said, to prevent prices from plunging. Many delegates at the meeting agreed with a recommendation to set up a fund of $2.9 to $5.8 billion to help banks deal with bad debts that involve property as collateral.

The money can found in the reserve commercial banks hold with the central bank, the central bank’s monetary stabilization fund, the government’s price stabilization fund, or the money raised from divesting the government’s stakes in state-owned companies. Hien said property firms are now struggling to find buyers. ''Therefore banks and state-owned property firms should draw up incentives to encourage people to buy houses,'' he said. Nguyen Huy Cuong, director of Sacombank Securities’ market research department, said, ''Property firms should focus on selling houses worth more than $29,500, which have a huge demand.'' At another meeting held by investment fund Vina-Capital last week, real estate consultant Savills’ CEO Brett Ashton said the housing market is bottoming out and was not sure when it would bounce back.

Phu My Hung Corp.’s marketing director Alpha Chen expected the market to take at least three years to rally.