Vietnam Real Estate Explorer

Nearly VND1.5 trillion to build tunnel, overpass in Thu Duc crossroad

2010-05-30T23:21:00.000-07:00

The Ho Chi Minh City Department of Transport has just ratified an initial report on a project to build tunnel and overpass in Thu Duc intersection in HCM City at a cost of VND1.466 billion (US$77 million).

As planned, the tunnel will run along Hanoi Highway, and have a length of 80 meters and eight lanes. The overpass will be 370 meters long and have four lanes.

The traffic-circle will be 40 meters in diameter.

The project’s owner is Urban Traffic Management Department No. 2.

The department is set to soon submit to the city’s People’s Committee method of investment to carry out the project as soon as possible.

Source: SGGP

Korean investor to build exhibition center in HCM City soon

2010-04-03T11:04:00.001-07:00

Korean-invested Sky Expo Vietnam Co. will start work on a large-scale exhibition center in HCMC’s Quang Trung Software City in the middle of next month, mainly to cater to ICT events in the country, said the investor.

Sky D. Kim, general director of Sky Expo Vietnam, told the Daily on Monday the sprawling exhibition center named Saigon Sky Expo Center would cost some US$44.6 million, and first-phase construction will be completed late this year.

The center will cover nearly 40,000 square meters in the premises of Quang Trung Software City in the city’s District 12, and when fully commissioned, it will supply over 12,000 square meters of indoor exhibition space and 4,000 square meters of outdoor exhibition space. The center will also have a conference center of over 2,800 square meters, and other facilities such as a food and beverage center, a golf driving range, an entertainment area, a fitness center and a hotel.

The first phase of the project will be put into operation late this year, becoming the third international convention center in the city after the HCMC International Exhibition and Convention Center in Tan Binh District and Saigon Exhibition and Convention Center in District 7.

Kim stressed that the new center would provide a venue of entertainment for the city’s people besides the exhibition business.

“We will have an entertainment area at the park for some 8,000 people on weekends in addition to the convention center,” he said.

The main focuses of the company are important international exhibitions, many of them from events involving ICT. Initially, in its first year of operation projected in 2011, the center is expected to host 35 exhibitions, 80% of which will be international events.

Mentioning the project’s second phase, Kim said that in late 2011 the company would start work on a hotel and expand the functional facilities following its initial commitments.

Kim said he expected the new center in the next ten years will become a leading convention center in Vietnam and in the region.

Source: Saigon Times

Where are Viet Kieu house-buyers?

2010-04-03T11:03:00.001-07:00

High prices and complicated procedures are two main factors that hinder Viet Kieu (overseas Vietnamese) plans to buy houses in Vietnam.

When the Government allowed Viet Kieu to purchase houses in Vietnam, real estate investors rejoiced. They hoped to earn tons from selling houses to Viet Kieu. Now, very few houses have been sold, even though a series of high-end real estate projects have been launched.

Real estate agents report that many Viet Kieu come to explore procedures for buying houses. After investigating the market, many give up their plans because of overly high prices.

Vinh Nghiem, a Viet Kieu in the US, really wants to return to Vietnam, but he still must consider whether or not to purchase a house since they are so expensive.

A real estate developer, who asks to remain anonymous, explained that many Viet Kieu also have financial problems. Owning houses in Vietnam is just a third or even fourth priority for Viet Kieu, especially when they have to spend a lot of money to buy houses in their home countries. To encourage them, he asserted, there should be suitable financial solutions.

Le Hoang Chau, Chair of HCM City Real Estate Association, agreed that not many Viet Kieu have enough money. Chau remarked that the decision to allow Viet Kieu to buy houses in Vietnam only stimulated the market a little.

Chau observed that Viet Kieu, just like other Vietnamese people, must pay tax equal to two percent of the total value or 25 percent of the profit. The tax makes everyone hesitate to purchase or sell houses.

According to Luong Bach Van, Chair of the Liason Association of Overseas Vietnamese in HCM City, the door to Viet Kieu is just half-open.

Under current laws, Viet Kieu can purchase houses without Vietnamese nationality. Yet it is difficult for Viet Kieu born in foreign countries and whose parents have died because they cannot prove their origin. Without such evidence, they cannot purchase houses in Vietnam.

Other analysts note that the Government still does not have a decree to guide implementation of the law.

Sources from the Ministry of Construction stated that they have opened a draft document on the law to collect opinions.

Source: Vietnam Net

Master zoning plan will not move Vietnam capital

2010-03-30T23:21:00.000-07:00

A master zoning plan for Hanoi until 2030 will not move all the central government agencies out of the capital’s center as recently speculated, an official said.

In fact, a national administrative center would be set up around Ba Vi Mountain, some 60 kilometers from the city’s center, while many central political and constitutional agencies would stay in Ba Dinh District, Ngo Trung Hai (photo), head of Vietnam Institute of Architecture, Urban and Rural Planning, said in a recent interview with Tuoi Tre.

Hai made the statement after Vietnam Building Environment Association on Sunday proposed the National Assembly and the government postpone approving the plan made by the US-South Korea consultant joint-venture PPJ and the institute.

The association said moving the national administrative center would mean moving the country’s capital in effect, denying Hanoi’s 1,000-year history.

However, Hai argued that the move was necessary, as it would make the governance easier, adding that many other countries had made the move.

Once several agencies were moved out of the city’s center, there would be more space for public works and trees, he added.

Hai also rejected the association’s concerns over risks contained in the project to set up cities along the Red River as part of the master plan.

According to the official, the zoning plan was backed by a specific research board and already taken public feedback into consideration, so it was not a “random” plan as critics made it out to be.

As for the association’s doubt about the possibility of cutting down the population in four central districts to 80,000 by 2030 given the current population is nearly 1.2 million, Hai said it was a significant need to control the population, if they wanted the capital city to become greener and more sustainable.

Related agencies and associations needed to join the plan to meet the target, he stressed.

Asked about the association’s accusation that the “green corridor” and biological diversity reserve establishment listed in the plan was unreal, Hai said their plan was supported by advanced computer programs and reports from agencies dealing with natural resources and environment.

Hanoi would have three reserves to preserve its biological diversity, and these plans were made in accordance with environment laws, Hai said.

First prepared in December 2008, the US$7-million project, titled General Zoning Plan for developing the capital through 2030 with a vision until 2050, is expected to be finalized and submitted to the National Assembly this year.

Source: Vietnam Net

Lion Group to build more Parkson centres

2010-03-30T23:18:00.000-07:00

The Lion Group plans to open more Parkson shopping centres in Vietnam to maintain the chain’s development and expand their retail network.

The group manages 82 Parkson stores, with five in Vietnam, 42 in China, and 35 in Malaysia. Parkson is focused on fashion, jewellery, cosmetics, furniture, electric goods and food.

Besides the Vietnamese and Chinese markets, Lion plans to penetratethe Cambodian and Indonesian and other ASEAN markets by the end of 2011.

Source: VOV News

Central Vietnam set for revival of resort boom

2010-03-14T00:47:00.001-08:00

It will be an exciting year for resort development in the central coastal region with 700 rooms being added, real-estate consultant CB Richard Ellis has said in a report.

This will take the number of rooms in the region from Danang to Hoi An to 2,000.

The new rooms will be supplied by Silver Shore International Resort, Olalani, and Life Resort when they open to guests this quarter.

Half of the rooms will be in Danang-based four- and five-star resorts, tripling supply in Vietnam’s fourth-largest city.

But the new supply means it will outpace demand in the short term, softening occupancy rates this year despite a forecast of rising international tourist numbers to Danang, thanks to the global economic recovery and the receding swine-flu fears.

Supply is expected to quadruple in the next seven years with the construction of 34 resorts on the Danang-Hoi An stretch.

The market for resort condominiums and villas in Danang, dominated by two-bedroom condos and three-bedroom villas, will also see an upturn this year with the revival of projects that had been stalled by the economic downturn.

Condo supply is expected to top 700 units in 2010-11 -- against 374 last year -- with a total of 80,000 square meters of floor area.

The supply of villas is expected to hit 700 units, also almost double the current number.

The expected new developments are An Vie Da Nang Resort, Le Meridien, Hyatt Regency, Ocean Villas, Nam Long, Montgomerie, Vin Pearl Da Nang, and Son Tra Resort.

Around 63 percent of condos were sold out last year, with 80 percent of the buyers coming from Hanoi.

Investors have to be cautious when entering the market since “speculation is quite high” as many of the purchases have been in the form of “reservations.”

Vietnews

Realty project management firm makes its debut

2010-03-14T00:44:00.001-08:00

VinaProjects - a joint venture between the VinaCapital Group and the inProjects Group - made its debut in Ho Chi Minh City yesterday, providing real estate services.

The company’s real estate services include project management, construction management, urban planning and facilities management in the Vietnamese market.

The VinaProjects is currently carrying out key urban development projects worth more than US$500 million in Ho Chi Minh City, Hanoi and Da Nang.

Matt Fletcher, Managing Director of inProjects - the leading independent project management group in Asia - lauded the Vietnamese market’s huge potential. The group’s target is to make the VinaProjects, and more importantly Vietnam, well known for the development of large-scale, high-quality projects.

This view was shared by the VinaCapital General Director, Don Lam, who said that his group was developing a number of major property projects in the country and wanted to apply international standards to their implementation.

As a leading asset management and property development firm in Vietnam, the VinaCapital is managing assets worth a total of US$1.6 billion.

Source: Vietnews

City residents lament ceaseless roadworks

2010-03-14T00:40:00.000-08:00

A roadwork on HCMC’s Phan Dinh Phung Street. Many city residents are furious with project contractors for failing to adequately resurface roads once works are complete.

Ho Chi Minh City residents complain that despite the recent completion of several city road works, there looks to be no end in sight to the disruptive projects in 2010.

More than 30 kilometers of pavement will be dug up in HCMC this year as part of infrastructure upgrades, leaving locals to deal with the ensuing traffic jams and chaos caused by the works.

Last month, the HCMC Department of Transport told contractors to dismantle barriers surrounding completed works and fill potholes before the February 14 Tet (the lunar New Year) holiday.

The measure was hoped to ease traffic congestion during the busy travel season.

Following Tet, however, several major road works have re-emerged, including ones on Phan Dinh Phung, Le Van Sy, Cach Mang Thang Tam, and Nguyen Kiem streets.

Most of the projects have been commissioned by the HCMC Environment Sanitation Project and are related to the Nhieu Loc-Thi Nghe Canal and its basin, the East-West Highway Project, and the Water Environment Improvement Project.

Minh Trung, owner of a clothing store on Phan Dinh Phung Street, complained that five road works were being carried out on over one kilometer of the street, causing round-the-clock traffic congestion. Moreover, only two of the projects have announced completion dates.

Many residents on Phan Dinh Phung, Le Van Sy, Cach Mang Thang Tam, and Nguyen Kiem streets say they are furious with the poor state of roads and traffic near their homes.

While contractors have dismantled the barriers of completed projects, they have failed to adequately resurface the roads and have been careless about their work, according to locals. As a result, numerous large potholes lie like traps for drivers, especially motorcyclists.

Pham Van Long, an official from the VIC Joint-Venture Construction Company, said many road works are behind schedule due to unexpected issues that have arisen while digging up streets.

For instance, workers had to stop while carrying out a project at the Tran Cao Van-Hai Ba Trung intersection in District 1 after discovering underground water pipes, and electric and telephone cables, which were not indicated on blueprints.

The HCMC Department of Transport has now fined three contractors VND6 million each for lacking licenses, violating safety measures, failing to warn drivers about the works, and using inadequate barriers. A lack of inspectors to crack down on such violations has also contributed to the problem.

As part of efforts to address the issue and improve traffic in HCMC, the Government has approved a project titled “Strengthening personnel and equipment for transport inspectors” with total capital of VND514 billion.

Source: SGGP

First Thu Thiem tunnel section to be towed tomorrow

2010-03-09T07:11:00.000-08:00

One section of the Thu Thiem tunnel, which will be towed to the construction site in District 1, HCMC, tomorrow. A rehearsal for the tow is to take place today, March 6

A rehearsal of the first section of the Thu Thiem Tunnel being towed from Dong Nai Province to Ho Chi Minh City will be carried out today, said the East-West Highway and Water Environment Project Management Board.

The rehearsal is a preparation for towing the section from the province’s Nhon Trach District through Sai Gon River to the construction site in District 1 tomorrow, said Luong Minh Phuc, director of the Project Management Board.

The section, which is 92.4m long, 33.3m wide, 9.1m high and weighs 25,000 tons, is one of the four for the tunnel, he said.

The project contractor will use four tugboats to drag the section 22km along the waterway with an extra tug boat to follow in reserve.

The towboats will depart at 7am, and take about six hours to deliver the section with a maximum speed of 5.5 km per hour.

For safety reasons, all vessels will be banned from traveling on Sai Gon River from 7am on Sunday to midnight on Monday, March 8.

The section will be installed on Monday, and another three sections will be towed and installed in April, May and June.

The tunnel, which is part of the East-West Highway and Water Environment Project, is expected to be completed next year, linking inner HCM City to District 2.

Source: Vietnam Net

Vietnam Real Estate Growth Limited By Regulatory Environment

2009-12-26T23:00:00.002-08:00

The key factors limiting Vietnam's real estate market are: a lack of transparency, access to funding and the legal framework. Heeding the lessons learned by Vietnam's counterparts in the Asian property sector should advance the position of this emerging market. See the following article from Property Wire for more on this.

Improved legal and financial frameworks are needed if Vietnam’s emerging property market is to grow into a sustained real estate environment, it is claimed.

The country’s real estate sector will continue to grow and attract investors in 2010 but potential problems such as rapid urbanization, environmental pollution and supplying sufficient low cost housing needs to be addressed, a two day conference heard.

Tran Kim Chung from the Central Institute for Economic Management, part of the Ministry of Planning and Investment, said Viet Nam’s property market has recorded several achievements in recent years, contributing greatly to the country’s urbanization, improving urban landscapes and raising people’s living standards.

He told delegates at the conference in Ho Chi Minh City that the real estate market plays a crucial role in the country’s economy and its growth has attracted a great amount of investment capital. Its growth will elevate and stimulate other economic sectors, he said.

But the conference heard that the domestic property market still suffers from several shortcomings, including a lack of legal framework for real estate investment, real estate bonds, secondary real estate mortgages and real estate saving funds.

Despite commercial banks regularly granting credit to customers, the market still needs more funding, Chung said.

He said another problem with the sector was the lack of transparency, as it mainly depended at present on sellers, with buyers sometimes not having enough information on their purchases.

Chung called for the law on property registration to be improved and said issues relating to property finance and property information should be examined. Training is also needed to make the sector more professional, he added.

Also attracting foreign investment is vital. ‘We will continue to gradually expand the range of foreign investors involved in the property market. This is one of the important tasks in attracting resources to the domestic property market,’ he claimed.

Developers support the drive for change. Le Chi Hieu, chairman and general director of Thu Duc Housing Development Corporation, said new policies are crucial for the real estate industry to move forward. ‘We need a stable and correct assessment of the real estate market and to concentrate more on developing suitable policies relating to the property sector and real estate trading,’ he said.

Alan Tong, former chairman of the International Real Estate Federation, said Vietnam could learn from other Asian real estate markets such as China and Singapore and avoid mistakes that they have made.

Though the transparency in legal and regulatory environment has greatly improved, more needs to be done to help the property sector more attractive, said Boaz Boon, vice president of CapitaLand Limited. He said investment performance measurements, availability of information on market and transaction processes needed to improve urgently.

‘We cannot expect the market to be transparent quickly but it should move to a semi-transparent phase soon and move further from there,’ he said.

This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.

Vietnam’s Inflation Accelerates to Eight-Month High

2009-12-26T23:00:00.001-08:00

By Jason Folkmanis

Dec. 24 (Bloomberg) -- Vietnamese inflation accelerated to the fastest pace since April as higher rice prices pushed up food costs while an accelerating economy fueled domestic demand.

Consumer prices rose 6.52 percent this month from a year earlier, according to figures released today by the General Statistics Office in Hanoi. That compares with November’s 4.35 percent inflation rate and is the fourth straight month of gains. Prices climbed 1.38 percent in December from November.

Vietnam’s central bank announced an interest-rate increase on Nov. 25, becoming the first in Asia to raise borrowing costs after a loan-subsidy program led to what Nomura Holdings Inc. described as an overheating economy. Growth accelerated to 5.8 percent in the third quarter, the fastest pace this year.

“It’s going up quickly, but we have to keep in mind that Vietnam can maintain fast growth even with inflation of as high as 8 or 9 percent,” said Ly Xuan Hai, chief executive of Ho Chi Minh City-based Asia Commercial Bank, Vietnam’s third-biggest listed bank.

The central bank’s latest rate increase took effect on Dec. 1, with the benchmark rising to 8 percent from 7 percent. The State Bank of Vietnam had cut the rate to 7 percent in February from as high as 14 percent in October 2008.

“It’s too soon to make a decision on interest rates,” Hai said in a telephone interview today. “We should wait for the January figures.”

‘Not Quelled’

The acceleration in inflation last month, from 2.99 percent in October, shows macroeconomic instability in Vietnam, Moody’s Investors Service said earlier this week.

“Inflationary expectations have not been quelled,” Moody’s said in a Dec. 21 statement.

Overall food prices rose 5.8 percent in December from a year earlier, compared with a 3.5 percent gain in November. Rice prices in Vietnam, the world’s fifth-biggest consumer of the grain, have increased “substantially” since early November, the U.S. Agriculture Department said in a Dec. 11 release.

Domestic demand has seen a “full recovery” in Vietnam, Goldman Sachs Group Inc. said this month, helping to drive economic growth that may reach 8.2 percent next year, according to the New York-based bank.

Prices in the category including construction materials rose 12.6 percent in December, compared with an 8.4 percent increase in November.

‘Burgeoning Real-Estate’

Vietnam has a “burgeoning real-estate sector,” said Don Lam, a director of London-listed property fund VinaLand Ltd., in a Dec. 21 stock-exchange release. Residential projects in the country have “witnessed strong demand and rising prices,” Lam said.

Inflation may reach 14.2 percent by the third quarter of 2010, Nomura said in a Dec. 16 report, predicting that the Vietnamese government will shift its focus to fighting price increases from boosting growth.

A weaker currency “is likely to add to inflationary pressures and increase the need for additional rate tightening,” said Sonal Varma, a Mumbai-based economist for Nomura, which expects the Vietnamese central bank’s benchmark interest rate to reach 11 percent by the fourth quarter of 2010.

To contact the reporter on this story: Jason Folkmanis in Ho Chi Minh City at folkmanis@bloomberg.net

Vietnamese real estate returns to center stage

2009-10-19T20:11:00.000-07:00

Some 500 projects will be unveiled at a conference and exhibition next week in Ho Chi Minh City.

Vietnam Top Property Opportunities, the country’s largest such event, will take place from October 21-22. It will provide opportunities for foreign and local realtors to network, learn from each other, and make the most of the post-recession market.

The conference and exhibition will attract foreign and local investors, government officials, economists and property experts, according to the organizers from Sao Khue Communications Corp., who expects the event to inherit success from the first Vietnam Top Property Opportunities last year.

“The international real estate event brought business opportunities and benefits for not only investors but also government agencies. We are supporting the event as a bridge to introduce Vietnamese real estate projects to the world,” said the head of the Foreign Investment Agency, Phan Huu Thang.

According to the organizers, the event in 2009 with the theme Time of Big Opportunities will introduce 500 real estate projects for which foreign investment is sought. Crisis brings challenges and an opportunity to make bold changes and more fundamental restructuring, the organizers said.

Government officials from the ministries of Planning and Investment, and Construction will present the government’s views on and reactions to the crisis and how the Vietnamese government is coping with the recession and taking measures to boost economic growth. A bright future awaits the economy as Vietnam witnessed overall GDP growth of 4.6 percent in the first three quarters. Industry and construction, which account for 40 percent of the Vietnamese economy, grew 4.5 percent in the first three quarters, with the subcategory measuring construction alone expanding 9.7 percent.

The event will consist of two parts. Part one will provide a macro-vision of Vietnam’s economic status in light of the government’s economic policies as well as the global context. Part two will center on more in-depth and professional analyses of the current situation and opportunities, providing understanding that may help with investment and business decision-making.

Promising market

According to the organizers, experts and investors in real estate will discuss the prospects for investment in tourism-related real estate and retail distribution in the industry. As an excellent destination, in 2008 Vietnam attracted more than US$10 million worth of investment in tourism property. In 2009, the country has

been less attractive to foreign investors due to the recession. However, recovery will bring opportunities at year-end and next year. Retail distribution in real estate and trade markets is promising since the government introduced its stimulus package. “Vietnam’s real estate will develop in a stronger wave in the next five or ten years,” said Martin H. Kaye, chief executive officer of Millennium Group & Starbay Holdings.

More promising is residential and industrial property and infrastructure, according to the organizers. Young people dominate the country’s population of 86 million and create a huge housing demand. A national report says that, in Vietnam, two people of working age (15-60) now support one dependent relative, rather than two relatives ten years ago. This will create more opportunities for Vietnamese working-age people to spend their incomes on consumption and housing. Don Lam, director of VinaCapital, said in a meeting that the residential housing market had the most potential in Vietnam and the fund manager would focus on the market as its strategic goal for investment in Vietnam for the next couple of years. He insisted that houses priced at VND1-3 billion ($56,053-168,161) each would be the best sellers in the country when the asset was affordable for a local family to own.

Manufacturing development always goes in parallel with transport and logistics infrastructure development. The area has been the focus of Vietnam’s economic development policy for the last 20 years to the extent that there are now over 200 industrial parks and export processing zones nationwide. However, there are still shortages of key infrastructure like electric power, seaports and related land infrastructure such as roads and bridges. Any delay in solving this problem will result in a shrinking of foreign direct investment.

The Mekong Delta is the country’s largest rice-growing region but is the least developed in terms of infrastructure, leading to slow growth in the economy. The government is inviting investors to the area and encouraging infrastructure development there. The new issue will be mentioned in the event as a new destination for investors, who will meet authorities from the southern region and learn from projects.

CASINOS IN THE CROSS-HAIRS

Casinos are one of the hot topics in real estate investment. This issue will be addressed by government officials at the event. For the benefit of the Vietnamese government, one or two presentations will cover the way other countries handle casinos, and the business models they use.

The government has piloted casino investment in some provinces and cities frequented by international tourists and foreign investors. Numerous applications from major international groups have been submitted to operate casinos in different cities and provinces. The first pilot casino project started in Do Son in 1992 but since then the business has been under tight control and restricted in many ways.

source TNO

Real estate prices go up and down in accordance with rumours

2009-04-15T08:41:00.000-07:00

Experts said that the actual real estate prices are not as high as rumoured. Even when the prices really increase, the high prices are just precarious.

Real estate market not thawing, only prices pushed up

It always happens that after Tet, the real estate market becomes more bustling. Vietnamese consumers think that they need to make investments in something at the beginning of the year so as they can get good luck in the year.

Good opportunities for investment?

Real estate has become the investment channel favoured by many people, as the stock prices decreased continuously and the bank deposit interest rate proved to be unattractive.

People think that the real estate price has bottomed out, and it is now the right time to make investments. That explains why real estate centres these days receive a lot of visitors who come to learn more information and seek to buy land and houses. Meanwhile, the centres’ doors were silently shut for the whole day several months ago.

Nguyen Thi Hoa in Thanh Xuan district, who is seeking to buy some houses, related that right before Tet, when banks lowered the deposit interest rates, she withdrew money from the banks to purchase gold. As the gold price has increased, she decided to sell her gold. Hoa heard that the real estate price in Cau Giay district in Hanoi is ‘hot’ and she decided to come here to ask for more information to seek investment opportunities.

Edward Chi, Director of Minh Viet Investment Company who has experience in real estate investment in Hanoi, related that it is now the right time for investors to inject money in after a long period of the market’s hibernation.

However, Chi said that the ‘real estate fever’ this time has specific characteristics. He said that the fever does not take place on a large scale as it did previously, but is occurring in some areas where the infrastructure conditions are fairly good and not far from the centres.

Six months ago, people did not hear about low cost houses, while the concept has become popular to many people.

Before the global economy fell into recession, investors only made investments in high-grade apartments and villas, which could earn large profits. Therefore, the market fell into hibernation right after the global financial crisis broke out.

The prices virtual

The market has only warmed up again since the beginning of the year with the appearance of low cost products.

Chi said that in Vietnam, the sale much depends on the so called ‘word-of-mouth.’ People will rush to buy real estate in some localities if they hear that the real estate prices in the localities keep increasing.

However, he said that the actual real estate prices are not as high as rumoured. Even when the prices really increase, the high prices are just precarious.

The apartment price in the Bac An Khanh urban area has been cited as an example. At the time when the price in the locality was hot, some people could sell apartments at over VND 20 million per square metre. The price proves to be unimaginably high at this moment. However, the price fever in the locality has cooled down, and the fever is now attacking other areas.

Chi went on to say that it is too early to say that the real estate market has warmed up again even when the real estate prices in some localities have increased.

Trong Tuyen

Real estate market report (March 28th, 2009 - April 2nd, 2009) The property market can recover sooner than expected

2009-04-07T03:36:00.001-07:00

According to the information from the Review of Market and Prices, March’s property price index followed the February’s continuous growth, with an increase of ULPI-Land by 0.89 points (4.56%), and ULPI-Apartment by 0.39 points (1.47%).

After two months, land and housing prices increased by 11% (5.92% in February) and those for apartment increased by 6% (4.34% in February). According to the experts, if such prices continue to soar or to be stable in April, we will be allowed to say that land and housing markets would recover sooner than expected. Property prices have soared in March thanks to three main reasons such as: 1/ the banks’ interest rate support policy, 2/ the economy stimulation to be continuously developed, and 3/ the 3.1% Vietnam’s economic growth rate on the first quarter (despite of much slower than the same period last year, this rate is still a bright point for the global economy). Foreign direct investments (FDI) hit more than $6 billion, in which $3.8 billion are from businesses capital increase. It proves that investment in Vietnam still brings positive effects and keeps the investors with a good mind. Especially, the US government applied strong methods aiming to support the domestic property market, such as spending $1,000 billion to re-buy banks’ non-performing loans (mainly related to property), or pump another $400 billion for Fannie Mae and Freddie Mac property tycoons to guarantee liquidity and stimulate the US property market as well as to recover the trust of worldwide property and financial circles.

According to the DiaOcOnline’s report, on the last days of March, there were about 500-600 new assets per day launched on the DiaOcOnline.vn website’s transaction floor of Property Listings. More than 10,000 assets are available to be transacted on its floor. The number is much higher than before the Tet holidays (where each day only accounted for 300 assets sent to DiaOcOnline.vn by the customers, with a total number of assets daily available around 6,000-7,000 items).

Partially increase, decrease

Currently, the global property market hasn’t escaped yet from quietness. The garden housing market, in particularly in the suburbs of Hanoi, gets signs of prosperity. The architect Nguyen Thanh Nam, general director of Archi Investment Corporation, said that the garden housing market is still busy with real transactions.

According to Nam, this property segment is less affected than the general market, because its orthodox investors maintain good working methods and investment scale as well as time to complete property operation models and services. So, these products are always “optimized-exploited”, in terms of use value. Besides, the western area of Hanoi gets a huge advantage: it is adjacent to big tourism areas and beautiful nature, where the demand to relax is very high. Resorts in this area are in an overloaded state, especially for the peak season: customers must reserve a week very soon, to book their rooms. It creates heat for this market segment.

In HCM City, the market also knows a reverse increase-decrease: the Eastern area slightly rises from 3% to 10%, and the Northern area drops from 5% to 10%, compared to January, 2009. The additional compensation for moving households (on the Thu Thiem project) with rather big amount of money (about VND24,000 billion as expected) is considered as a reason to stimulate the purchase power of many customers in the Eastern area. Many households use their compensation money to buy land because they see the difference between the compensation price and the land price after the 2008’s crisis reduces. Two weeks before, a 6m x 16m foundation land plot, on the Khang Dien project in Phu Huu Ward, District 9, was advertised for sale at VND650 million. But now, it is at VND800 million, which means that its price increased by VND1.5 million/sq/m. Similarly, some projects’ prices, like Dong Duong 1, Khang An, Dien Phuc Thanh, (Phu Huu Ward, District 9), were at VND6.5-7 million per sq/m, and now at VND7.5-8 million per sq/m. However, the strongest increase has been recorded with the following projects: 174ha and 143ha areas in Thanh My Loi Ward, District 12. These two areas’ project foundation land prices rose from VND2 million to VND4 million per sq/m. For instance, Trung Tien Company previously advertised their project for sale at VND13 million/sq/m, but is now at VND16 million/sq/m.

Contrary to the Eastern area, the Northern one’s foundation land market is decreasing. Explaining this phenomena, Hoang Ngoc, a real estate broker in the District 7, said that a series of luxury apartment projects, such as Sunrise City (Nguyen Huu Tho, District 7), or Riverside Residence (Phu My Hung urban area), have been launched on the market, making many customers temporarily stop their investments to survey the market, instead of buying foundation land. Moreover, apartment buildings prices ready to be transferred to customers are considered as relatively suitable for living purposes.

Furthermore, less attractive legal procedures are also a cause of the land price decrease in the Northern area, during the past days (averagely plummeting from 5% to 10% compared to January, 2009).

Le Dinh

Vietnamese people hunting for houses in the US

2009-04-06T08:04:00.000-07:00

Bui Bich Nga, director of a garment material company in Tan Binh district in HCM City, has a daughter who is now a sophomore at Nevada State in the US. Nga and her husband made a trip to the US last month to visit their daughter, when they tried seeking a house to buy after hearing that the economic recession has made houses in the US become surprisingly cheaper.

Nga and her husband have decided to buy a house in Las Vegas in Nevada, which is now offered at US $350,000, or US $150,000 cheaper than the level offered the same period of the last year. Nga said that she is planning to make another trip to the US to fulfill the formalities to purchase the house, hoping that she can get it at less than US $300,000.

Nga related that a friend of hers, after three trips to the US, had successfully purchased a good house in California. “It will take her two or three more trips to fulfill formalities,” Nga said.

The economic recession has made the real estate prices in the US become very cheap with the prices down by more than 60% in some localities. According to the US National Association of Realtors (NAR), the real estate prices have dropped to record lows which make it easier than ever before to purchase houses now. A lot of houses in California, Nevada, and Florida, which have been offered for sale since mid-2008, still cannot find buyers.

In HCM City, more and more people book tours to the US these days in order to purchase houses. The majority of people have relatives living and learning in the US. It is estimated that 20 people, HCM City residents, have become the owners of houses in the US after buying tours from Hoan My Travel Firm.

The Vietnamese people, who hunt for houses in the US, prove to be very patient as they have to travel to the US four or five times to fulfill necessary formalities which cost them more than US $10,000 and take several months to travel.

Nga also said that buyers have to spend money and time to learn information about the houses they want to buy, such as the information about the houses’ situation, positions, maintenance fees, environmental fees, and land taxes.

The General Director of a real estate trading company in HCM City has advised Vietnamese people to learn thoroughly about the law system of the host country and the laws of every state in the US.

Under the current laws, Vietnamese people are not allowed to remit money abroad to pay for the houses they purchase. “In these cases, the house buyers have to ask their relatives in the US to come forward and purchase the houses, and then they pay the money back to the relatives,” said Ho Huu Hanh, Director of the HCM City branch of the State Bank of Vietnam.

According to Hoan My Travel Firm, travelers have to book the tours which allow them to travel and seek houses in some localities (US $3,100/person). After that, they can return to the US with the tours designed specifically for house buyers (US $2,300/person). During the trips, house buyers will have to work directly with lawyers, real estate firms, and pay consultancy fees.

Vietnam Net

HCM City zone to help address urban issues

2009-04-05T02:00:00.000-07:00

Ho Chi Minh City will team up with seven other provinces to form an international economic centre, which is expected to help address economic and urban development issues.

The HCM City zone is designed to develop as a multi-polar area with such satellite urban centres as Long Khanh and Nhon Trach, and among others.

According to a master plan developed by the Ministry of Construction, the zone will encompass, beside HCM City, Binh Duong, Binh Phuoc, Ba Ria-Vung Tau, Tay Ninh, Dong Nai, Long An, and Tien Giang provinces.

The HCM City zone is designed to develop as a multi-polar area with such satellite urban centres as Long Khanh and Nhon Trach, and among others. Its economy is set to base on international economic corridors, such as HCM City-Moc Bai-Phnom Penh (Cambodia)-Bangkok (Thailand), and domestic economic belts.Vice Permanent Chairman of the HCM City People’s Committee Nguyen Thanh Tai said the master plan will help localities in the zone spur their economic development in a sustainable and interactive manner.

The zone is expected to help the southern hub expand its urban space to accommodate the growing population.

Source: VNA

Spanish infrastructure firm opens office

2009-04-05T01:59:00.001-07:00

Garuda Asca Co, a Spanish construction management company of seaports and airports, has set up a representative office in Ha Noi.

The Garuda Trade Co SL office provides consulting, investment and construction services for infrastructure projects including market surveys, trading and others. The office will promote co-operative projects between Spain and Viet Nam and is set to operate until 2018.

The representative office will support Garudas activities in Viet Nam. It first came to the country over two years ago to begin a US$8 billion BOT (Building -Operation-Transferring) project for construction of the now international Ha Noi-Hai Duong airport and a world standard aviation and duty free trade centre.

"Under the BOT project, the Government will grant rights for 30 years or more to investors for project execution and to pay principle debts," said Garuda Viet Nam.Project construction is expected to begin this year after completion of the feasibility study. The first of three phases will cost about $4 billion and last from 2009 to 2013. Phase two will run in at $1.5 billion and last from 2013-18. The final phase will cost $2.5 billion.

Completion of phase one will sec a capacity of 480 flights per day and 35 million passengers per year. Capacity will grow to approximately 850 flights daily and 62 million passengers annually by 2028, and to 1,096 flights daily and 80 million passengers annually by 2035.

The project is located on a total area of 50sq.km in northern Hai Duong Province, 45km from Ha Noi. The airport will be equipped with advanced technology, facilities, security, and information and management systems. It is expected to generate 5.800 jobs.

Garuda also plans to build a hotel and apartments for 1,500 people. The new airport is due to replace the overloaded Noi Bai International Airport, which will likely be relegated to domestic flights only. Noi Bai has reached its full capacity at over 15 million passengers per year.

"Besides this project, Garuda Viet Nam is also looking into plans to invest in Van Don and Chu Lai Airports," said Giuliano Miotti Koenigsberg, general manager of Garuda Trade Co Viet Nam.

"Spanish enterprises are ready to come here and we see good relationship, potential in trade and investment between Spain and Viet Nam," he said. Garuda's partners include investors and suppliers, such as Duro Fclguera, Indra, Idom and Sol Melia from Spain; Iveco from Italy; UFL and Airis Holding LLC from New Zealand, and Thyssen Krupp, all of which already have activities in Viet Nam.

Last year, the Government approved projects to develop and expand other airports in Viet Nam, including Da Nang, Chu Lai and Dong Hoi.

Source: Vietnam News

Office space rentals crash in HCM City

2009-04-03T20:54:00.001-07:00

Office rents in HCM City have plunged by up to 50 percent and the trend is tipped to continue as bell lightening and office construction ensure that supply far outstrips demand.

Foreign real estate companies Cushman & Wakefield, Savills and CB Richard Ellis said top quality office space rents had fallen from a peak at the beginning of last year of US$70 per sq.m to $43 this year and could go down as far as $30.

Rents for second-class space had fallen from around $45 per sq.m to $28-$40 and third-class office space from $39 to $14-$25.

The rents did not include service fees and VAT.CB Richard Ellis managing director Marc Townsend said clients would soon start to demand preferential treatment, including better parking, signage and decor.

He said office demand was closely linked with employment and financial stability and firms were tightening their belts, cutting jobs and also cutting costs on office rents.

They were assisted in this regard by an increase in vacancies and 1.25 million square metres of new office space predicted to come into the market this year, adding to the downward pressure on rents.

Cushman & Wakefield, a private real estate firm based in the US, predicted leases of first-class office space would fall below $30 per sq.m.

Customers were currently paying $40 per sq.m in the centre of the city, $30 in the outskirts and $20 near Tan Son Nhat International Airport, the firm said.

The figures were published following a survey in the fourth quarter of last year.

Savills, a foreign-owned real estate firm in Viet Nam. said construction in the south had slowed significantly with only 930,000 sq.m of office space under construction till 2012.

Vinaconex Investment and Tourism Joint Stock Company general director Tran Ngoc Quang said the office investment market was gloomy and a recovery was difficult to forecast in light of the financial crisis.

Source: Vietnam News

Low-income earners a focus of housing plan

2009-04-03T20:52:00.000-07:00

Investors building commercial houses and urban complexes on areas 5ha and upwards must put aside at least 10 percent of that land to build houses for low-income earners, according to a draft proposed by the Ministry of Construction.

The draft was still being debated, as experts said there were alternatives for investors to build houses for low-income earners instead. The Ministry of Construction, meanwhile, said that investors would be exempted from land-use taxes among other advantages when they built houses for low-income earners.

Housing projects

Once approved, the draft would replace a Government decree that stated that, based on conditions in individual localities, provincial people's committees were allowed to ask investors building commercial houses and urban regions on areas 10ha and upwards to reserve a part of the invested land for technical infrastructure systems, which would in turn be used to build social housing projects.

The decree said that the reserved land area should not exceed more than 20 percent of the entire project area. Though the decree merely encourages participants to implement their duties, it has made many suspicious of its feasibility, the HCM City Real Estate Association is among them.It had already lodged a petition asking the Government to put forward other measures to implement social housing programmes instead of 'cutting' land.

According to the association's general secretary, Do Thi Loan, asking investors to contribute 20 percent of their land was too much, and would encourage other enterprises to falsely set up their projects at less than 10ha to evade their obligations.

Many believed that the ministry's draft would address the problem stated above after the area was reduced to 5ha. This would also mean that more investors would have to lake on such responsibilities in the future. Yet many specialists and investors had not concurred with the recent draft, arguing similar policies were abolished in Ha Noi and HCM City in 2005-06.

HCM City had to "say goodbye" to a regulation that asked investors to cut 10 city to build houses for the poor, while investors who had poured money into house-trading projects were asked to sell a fifth of their housing funds to the city at a base price.

Similarly, Ha Noi had to give up a request asking investors to give a fifth of their land to the city to build houses.

There was never any denying the policies were humanitarian in nature, but they were difficult to implement, so promulgation offices had to revoke them in the end.

Deputy Chairman of the Construction Association Pham Sy Liem said that it was better to encourage investors to buy land to build houses for low-income earners now, as land and housing markets He also suggested asking investors to transform their unfinished buildings into small-sized apartments for low-income earners, using cheap construction materials.

Echoes from past

The Ha Noi People's Committee issued a decision in 2001 which said it would be compulsory for investors to hand over 20 percent of their land funds or 30 percent of their housing funds to the city.

A conclusive statement released in 2007 by the Director of the Natural Resources and Environment Department, Vu Van Hau, found that Ha Noi had not met the demand for housing, especially among the poor, low-income earners and public servants.

In principle, the Land Law regulates the retrieval of land will only be made in cases of violation, or when the State deems it necessary for purposes of national defence and security, or national or public interests.

People who have land reclaimed and can prove their legitimate rights will be compensated and supported.

For investors, it is said that the actual land fund will bring them great benefits. But in fact, their benefits will decline if they obey the city's regulations.

Economists meanwhile have said that it is hardly enough to build cheap houses if investors have to contribute 20 percent of their land funds or 30 percent of their housing funds to the city.

Later, the decision was readjusted into another regulation that said investors would help the city prepare 20 per cent of their land for the city to build houses upon.

Liem wondered why they had to bind investors with contributions of between 10 and 20 percent of their land.

It would be better to consider large areas of "wild land" left idle in urban areas, he said. "It is necessary to retrieve the land within the law, so a land fund will be available to build houses." The head of the Ha Noi Social and Economic Development and Research Office, Nguyen Minh Phong, said it was essential to push projects aimed at building houses for low-income earners.

It was part of this year's plan to stimulate investment and consumption in an attempt to create economic growth and ensure social welfare.

The Ha Noi Natural Resources. Environment and Housing Department estimated that about 10,000 households in Ha Noi had been pressed about houses before the city expanded.

Yet, Phong said that investors were unwilling to invest in building houses for low-income earners because it was not at all lucrative.

Source: Vietnam News

Vietnam property market shows signs of recovery

2009-04-02T21:13:00.000-07:00

by Tony Adams

As gloom continues to descend over South East Asian property markets, is Vietnam, which oversaw one of the fastest growing and then most rapidly descending markets going to be the first to bounce back?

Following a year long cycle of decline, the Vietnamese property market is beginning to show signs of life again and they are signs that prices might start to recover in both Ho Chi Minh City and Hanoi. In the capital city, nearly 400 off-plan apartments in Keangnam Tower were sold not long after construction on the building started. Lots in the Van Phu Urban Area and Xa La high-class apartment projects in Hanoi´s newly-merged Ha Dong city have also been magnetic to investors, and prices have gone up nearly 20 per cent since Tet. Last year, investors paid little attention to these and other projects, as land prices were in heavy decline.

“Vietnam real estate entered the downturn in late February 2008 when the State Bank of Vietnam capped lending growth at 30 percent over 2007 levels,” Brett Ashton, managing director of Savills Vietnam says. “Many banks had already experienced lending growth in the first two months at or near this level and so limited new loans to long time clients. This had an almost instantaneous effect on the real estate market, particularly the condo market, which was the most over heated. This six to nine month head start, compared to the region, in price corrections in the condo market combined with renewed lending by banks this year suggests a modest but sustainable pick up in the market.”

B. Hawkins Pham, fund reporting manager of Indochina Land agrees.

“Vietnam’s property market was never gone – it has simply matured, and capital values have recalibrated after the exit of speculative investors,” he says. “The real estate market continues to be characterized by the dramatic imbalance between supply and demand. Across all grades, there is a significant shortage of residential, retail, office and hotel properties, and the high rental rates and low vacancy rates throughout the country are indicative of this lack of inventory.”

Indochina Land has been active both in the resort and urban sector for the past few years. The company has developed both the award winning Nam Hai villa and resort development and urban residential projects such as Indochina Riverside Towers in Danang and River Garden in Ho Chi Minh City, both of which are reportedly 99 percent sold, with several new transactions surfacing in mid-March.

“In our view, the current rally in the property market is a result of Vietnam’s limited investment alternatives – the equities market is underperforming and there is a structural lack of confidence in the local currency, as the Vietnamese dong systematically depreciates in order to bolster exports,” Pham says. “With interest rates in the domestic market trending lower, real estate investments in Vietnam will remain attractive in the year ahead, and this projection is supported as our soon to launch projects, Indochina Plaza Hanoi and the Hyatt Regency Danang Resort & Spa, have both received considerable interest in the pre-sales phase.”

In HCM City, the markets significant fall over the past year has helped balance supply and demand, prices are now at a more realistic level; apartments have become significantly cheaper.

“We believe that the apartment market is beginning to recover, with several projects launched recently sold out within a few days while others are selling reasonably well, albeit at a pace more in line with regional standards,” Ashton says. “Developers will need to build in longer sales periods going forward and price their products at sustainable levels over a sales period of a year or more. The secondary market is still flat but appears to have hit bottom, with prices stabilizing and even rising in some areas over the past few months.”

Apartments in Van Do, for example, which is several minutes away from the centre, are now selling for 20 million VND (US$,1140) per sq.m; they were at 30 million VND per sq.m before the decline.

“We continue to believe the lower to upper middle condo segments will perform the relatively well along with retail over the short to medium term,” Ashton says. “Offices are over-supplied at the moment and it will take at least two years for the oversupply to be soaked up in HCMC. However, supply may begin to exceed demand in certain parts of HCMC over the next two years so developers will need to be careful and look at their competitors.”

Another positive factor is that the prices of construction materials such as steel, cement and brick have also been coming down. Also, the current and forecasted low interest rates at domestic banks, coupled with limited good investment opportunities in other sectors, will make real estate an attractive investment-grade asset class and a safe saving vehicle for individuals.

“Compared to other Asian countries, Vietnam’s property market is in its infancy,” Pham says. “For instance, the SM Mall of Asia in the Philippines provides more square meters of retail space than all the department stores and retail centers in Hanoi and HCM City combined. As Vietnam’s economy grows and its young population matures, the need for quality world-class real estate properties will increase. Yet, Vietnam’s real advantage from a long-term growth perspective is its stable political regime and young hard-working population. Compared to countries like Thailand, these soft advantages make Vietnam a safe haven for investors seeking stability. Additionally, the lack of significant financial integration and generally lower leveraging rates afford Vietnam a degree of insulation from the direct transmission of the financial crisis.”

Bond issue to fund two big projects

2009-03-29T18:40:00.001-07:00

Finance Minister Vu Van Ninh has agreed with a HCM City proposal that it issue VND22 trillion (US$1.3 billion) worth of bonds to raise additional funds for two major cash-strapped projects in HCM City.

During a working session with city authorities on Wednesday, Ninh also approved the city's proposal that it receive in advance more than VND2 trillion ($117.6 million) from the central budget as bonus for exceeding its tax collection target last year.

The proposals had been made by the municipal People' s Committee vice chairwoman Nguyen Thi Hong to help the city finance ongoing projects, launch new ones and expedite work on the Hiep Phuoc Port Industrial Park and the Thu Thiem New Urban Area.

Minister Ninh said the two projects would help attract foreign investment in the years to come and pledged his ministry would work closely with the city administration to carry out projects beneficial to the country. The city also wanted the Government to advance money for implementing the two projects.

Hong blamed the current shortage of funds on the additional VND8 trillion ($470.6 million) that had to be given to support displaced residents in the Thu Thiem New Urban Area.

The first phase of Hiep Phuoc Port Industrial Park is nearing completion and its second phase is under way. The project is expected to be up and running in September.

The Thu Thiem New Urban Area has finished about 60 percent of site clearance and compensation work but is still short of funds.

With infrastructure and road access to the new urban area due to be completed by the end of the year, the city has proposed that the finance ministry provides more funds to speed up site clearance and compensation for the remaining areas.

The city's Taxation and Customs departments have forecast a sharp fall in this year's budget collection by roughly VND12 trillion ($706 million), or 20 percent of the initial estimate.

Vietnam New

Unprofessional real estate brokers will have no room on market

2009-03-29T18:39:00.001-07:00

Experts firmly believe that unprofessional real estate brokers will be eliminated from the market in the time to come due to the fierce competition on the market.

Real estate brokerage is believed to have a lot of opportunities for development and play a very big role in helping make the real estate market healthy. However, experts have pointed out that there exist a lot of problems with real estate brokerage.

A lot of real estate brokerage offices have been established recently. In order to set up brokerage offices, one should only have to hire a small business premises and advertise the office.

However, most of the offices, which were set up spontaneously, have been operating on a small-scale, and their employees are not professional. The offices do not have much information about land and houses that are offered for sale or purchase. In most cases, the brokers get information from personal relations rather than official channels. In other cases, they get the information from ad columns in newspapers, and then arrange trading deals with the information for commission.

Real estate experts believe that the unprofessional real estate brokerage offices are the ‘culprit’ of distorting the real estate market. They pushed real estate prices to overly high prices and provided incorrect information that caused disputes in trading activities. Meanwhile, the State failed to collect tax from real estate assignment deals as it could not control the transactions.

Tran Minh Hoang, Chairman of Vinaland, a real estate development company, said that in order to have a healthy real estate market, Vietnam needs to have professional real estate brokerage.

Hoang said that professional brokers should be the ones who understand the real estate market well, and can provide reliable information about real estate prices.

To date, many real estate brokerage companies have been established, which have been operating under professionally the mode of joint stock and limited companies. The brokerage companies have practice license, pay tax to the state, have the supply from investors’ projects and from construction companies, and provide reliable information to clients.

Pham Van Hai, General Director of ACB Real Estate Company, said that the brokerage operation has become more operational recently.

Previously, brokers only arranged deals between the sellers and buyers, and their role finishes when the deals are completed. Nowadays, brokers not only bring buyers and sellers together, but also sell ‘solutions’ to clients (providing sufficient information, giving consultancy and giving information about the expected profitability). Therefore, Hai said that good brokers should have a lot of knowledge in many fields, including geomancy and architect, and legal issues, and have skills in negotiations.

Hai also said that clients nowadays and in the past are different. Previously, when the real estate market was ‘in fever,’ buyers were mainly speculators, who did not care much for urban planning. Meanwhile, clients nowadays purchase houses for long term investment or accommodations; therefore, they need sufficient information about products.

Hai believes that unprofessional brokers will be eliminated from the market. He stressed that the best way to help the real estate market develop and help the state collect tax from real estate assignment deals is to set up reasonable policies to develop the system of professional brokers who will replace unprofessional brokers of recent years.

Vietnam Net

Real estate market shows resilience

2009-03-29T18:36:00.000-07:00

HCM CITY — Despite not showing much sign of recovery, the real estate market is exhibiting a surprising ability to absorb investment from all available capital sources, including banks.

Since the beginning of this year, banks have lent to several property projects. In the country’s two biggest real estate markets, Ha Noi and HCM City, around 10 major projects alone have absorbed around US$1 billion in bank credit.

In January, the Bank for Investment and Development of Viet Nam (BIDV) agreed to lend Hoang Anh Gia Lai VND5.65 trillion, ($323 million) for property development.

In February, The Bank for Foreign Trade of Viet Nam, known as Vietcombank, gave Indochina Land a loan of $44 million to develop the $145 million Indochina Plaza Ha Noi, a housing, office, and commercial complex.

Fei Yueh Viet Nam began construction of five-star hotel Nikko Sai Gon in District 1, HCM City, at a projected cost of $100 million.

Some banks have said they are ready to fund "good" property projects that are easy to buy and sell.

Nguyen Hoa Binh, chairman of Vietcombank, said Indochina Plaza is a sound project.

The Bank of Technology and Commerce, known as Techcombank is targeting really sound property development projects for lending, Nguyen Duc Vinh, its general director, said.

Besides lending to property developers, many banks have also earmarked considerable sums of money to lend to individuals buying housing. The latter amount is estimated at VND65 – 86 trillion.

Vietcombank is considering lending to people buying apartments in Indochina Plaza, Binh said.

Vinh revealed that his bank has earmarked VND1.5 – 2 trillion for loans to people who want to buy or repair houses in the next few months.

ABB Bank has given an estimated VND3 – 5 trillion in personal loans, a large part of which is thought to have gone into the property market.

Dang Hong Anh, chairman of Sacomreal – the property trading arm of the listed Sacombank – said the real estate market is ripe for recovery after a year of being in the doldrums.

Housing and land prices as well as bank interest rates have plunged and the Government is implementing several stimulus programmes, he said.

If property developers are ready to relinquish some of their profits and sell at reasonable prices, people would be ready to buy, he added.

Analysts said many property developers are opting for apartment blocks with small units to meet an increasing demand from young couples with moderate incomes.

Earlier this month, the Nam Cuong Group (NCG) began construction of two units of its NCG Residentials in Ha Noi’s new Duong Noi urban area.

At NCG Residentials, to be completed in 2011, 71 per cent of the units have an area of 55-sq.m. — VNS

Central, local authorities meet for population, housing census

2009-03-25T20:12:00.000-07:00

Permanent Deputy Prime Minister Nguyen Sinh Hung hosted a teleconference with authorities of all 63 cities and provinces across the country on March 24 in preparation for the upcoming 2009 general population and housing census.

“The results of the census will serve as an important ground for the Party and the Government to review the 10-year socio-economic strategy and prepare for the next ten years,” said Deputy PM Hung, who doubled as Head of the Central Steering Committee for Population and Housing Census.

“The census is a key task of the entire Party and people as well as authorities nationwide, so all forces need to focus on successfully completing the census,” he stressed.

He asked the mass media and authorities to help raise the people’s awareness of the importance, significance and requirements of the census and provide accurate and full information to census takers.

The Deputy PM also asked the population and housing census steering committees at all levels to provide necessary logistics for the enumeration.

According to Chief of the General Statistics Office Nguyen Duc Hoa, who worked as Deputy Head of the Central Steering Committee, all localities have to date completed the mapping work and census lists and are working on population lists.

As many as 5,000 training courses have been organised for officials of local population and housing census steering committees to learn about census management skills and for 30,000 census takers.

As many as 87 million people of 21 million households will take part in the census, which will officially kick off on April 1.

The general census is undertaken every 10 years and this year’s will be the fourth after those in 1979, 1989, and 1999.

Vietnam Net

Real estate market report (March 13th, 2009 - March 19th, 2009) Property businesses start a new race

2009-03-24T07:45:00.000-07:00

It seems that the property market is entering in a new race – the race of price decrease. This isn’t a secondary market’s price decrease (beginning of early 2008) but a strategy of property investment businesses.

Actively decrease the property prices

After Hoang Anh Gia Lai Group (HAGL) has reduced from $950 to $550 each square meter of the Hoang Anh Riverview and Phu Hoang Anh projects (accounting for a 40% decrease), other businesses also do the same.

Dat Xanh Real Estate Joint Stock Company lowered the prices of SunView Apartment (in Thu Duc District) from $1.300 to $764 each square meter. According to the latest unit price, this project knew a 50% decrease in comparison with November 2008. Besides, this company also supports the homebuyers with the 4% interest rate from banks, until January 1st, 2010. Customers buying the SunView apartments can borrow 70% of the total apartment value within 15 years, thanks to the Tien Phong Bank or the Vietin Bank.

For mid-sized projects, such as Thai Son, Sadeco, each square meter is now priced at VND10 million, compared to the previous VND24 million. The University Village project got its peak at VND30 million and is currently at VND12 - 16 million per square meter. Project land price with complete infrastructure in the Nha Be District only fluctuates about VND7 million/sq/m, compared to the previous VND17 milion/sq/m. Property prices in the District 9 and Thu Duc are around VND10 million/sq/m. Many projects’ villa foundations (10x20 or 8x20 areas) in Phuoc Long B Ward, District 9, proposed a VND6 million for each square meter but there were only a few customers (70% decline compared to the previous period).

Van Do apartment building (District 4) is used to have a VND30 million/sq/m, but it is now about VND18 million/sq/m. Hoang Anh Gia Lai 2 apartments are transacted at VND15 - 16 million per sq/m, a decrease of about VND10 million compared to its peak.

Contributing to this wave of price decreases, Hong Ha Development and Invesment Joint Stock Company lowered the price of The Morning Star (Binh Thanh District) from $2.000 (in 2008) down to $1.200 - $1.500 each sq/m.

Lam Van Chuc, Chairman of Phuc Duc Real Estate Company said that the property price decrease expressed the desire for capital withdrawal from investors. The situation will be worse if the property prices are kept high and unmarketable. According to him, most businesses have spent too much money in long-term investment projects. Now, because they wish to withdraw a part of their stagnant finance, they aren’t afraid of launching a series of promotion campaigns. “Capital management to avoid the loss going to happen is very important for businesses’ survival, thus they find ways to reduce the price, stimulate, accept less profits, in order to sell more commodities,” he emphasized.

Property prices will continue to fall

Le Tham Duong, head of Finance Department, University of Banking, judged that this is a wise action of the businesses amid the difficult economic situation. According to him, the construction cost for an apartment is 9 dong, and they are only able to sell at 9.5 dong. They can’t expect the rate of 10 dong. This is not only applied for Vietnam but also in the whole world. Therefore, some property businesses have only two choices: either decrease or die. Price decrease will force the employees and workers to develop their brand name and even satisfy their strategic partners.

Similar to Le Tham Duong’s view, Le Hoang Chau, chairman of HCM City Real Estate Association (HoREA), acclaimed the positive movement of the property investors about their price decrease, contributing to foster the Government’s stimulus program. In the current frozen period, selling price decrease of the apartment projects infuses a new spirit into the market. This decrease is indispensable at the time when the market has only sellers, but no buyers. Moreover, prices of construction materials have deeply plummeted, directly affecting prices of commodities. In addition, Chau advised the investors to reduce their selling prices, without affecting the quality of commodities and by extending progress of homes hand-over.

Some foreign experts working in Vietnam for many years told to DiaOcOnline that property prices will continue to decline for 2 reasons. First, the 2009’s economic downturn will continue. And secondly, the current property prices remain high compared to the population income having real demands of housing. According to our assessment, although current property prices have fallen, they remain too high compared to the beginning time of the property fever in 2007. For instance, projects in Districts 2, 7, 8, 9, Nha Be, Binh Chanh, and Saigon South area had selling prices of VND7 million/sq/m at its previous period. After the fever, their prices increased fourfold, up to about VND28 million/sq/m. And now, the current price remains at VND10 million/sq/m (VND3 million more than the 2007 pricing). Generally speaking, the property market during the past time can be considered as the inflated part of a balloon.

Despite the foundation land prices are low, they are still out of reach from those having real demands of housing. As a result, there are few transactions. Some successful ones mainly focus on a group of customers having real demands of housing, but not for investment. Hi-end apartment prices are continuously slumping down, but there are only a few customers, because they aren’t much interested in buying them in such difficult period.

Le Dinh

Low-priced apartments for low-income workers

2009-03-23T06:21:00.000-07:00

Vietnam Construction and Export Company (Vinaconex) has lately been focusing on constructing a number of buildings to provide more apartments for low-income workers.

The company is selling apartments in two of its buildings in Chuong My District, Hanoi at the price of only VND195 million for each 50 square-metre apartment in the buildings.

Meanwhile, another of the company’s projects in the city of Vinh Yen is also helping to ease the housing demand for low-income workers by offering apartments that they can buy for only VND180 million each.

The company has also built many apartments in the districts of Dong Anh, Thanh Tri and Phu Cat in Hanoi for workers to rent at the fee of just VND150,000 per person per month.

Nguyen Van Tuan, Chairman of Vinaconex’s Managing Board said that in order to meet the housing demands of low-income workers, preferential government policies such as exemption from land bidding, should be made for investors. Moreover, the selling of the apartments must also be better promoted to let people who need low-income housing know about them.

QDND

Kume Sekkei opens its subsidiary in Vietnam

2009-03-20T19:39:00.000-07:00

Kume Sekkei, one of Japanese largest architecture and construction companies, has chosen Vietnam to base its subsidiary, named Kume Design Asia.

At a ceremony to open Kume Design Asia in Ho Chi Minh City on March 18th, the General Director of Kume Sekkei Yukio Yamada said that with the opening of Kume Design Asia, Kume Sekkei has officially entered Vietnamese architectural market.

Kume Design Asia will run business in not only Vietnam but also other countries in its neighborhood, the Middle East and North Africa as well, said the General Director.

According to him, the world economy will escape from the current economic recession in 3-4 years and Kume Design Asia will then have a chance to be a leading designer in Asia.

Founded in 1932 and based in Tokyo, Kume Sekkei has so far designed more than 6,000 projects in Japan and 40 other countries.

Kume Sekkei has marked its presence in Vietnam with its participation in designing Can Tho university and the Japanese Embassy in Hanoi and it is now realizing a project to erect Nikko Sai Gon.

Source: QDND

ADB lends more than US$400m for expressway construction

2009-03-20T19:38:00.001-07:00

The Asian Development Bank (ADB) signed an agreement on March 20 to provide the Vietnamese Government with a loan worth US$410.2 million to build a 51km expressway linking Ho Chi Minh City, Long Thanh and Dau Giay.

The US$932-million project will receive other funding from the Japan International Cooperation Agency (JICA) and the Vietnam Expressway Corporation.

The four-lane expressway runs from the centre of Ho Chi Minh City through a 1,700m bridge over the Dong Nai River to Dau Giay in Dong Nai Province.

“The new expressway will have a significant social and economic impact on Ho Chi Minh City, its surrounding provinces, and the Greater Mekong Subregion,” said Ayumi Konishi, chief ADB representative in Vietnam.

It will help regulate traffic flows and reduce transport costs and time, as well as accidents and pollution, he added. The project is scheduled for completion in 2014.

VOV News

Funds available for displaced Thu Thiem residents: officials

2009-03-19T20:52:00.001-07:00

The Ho Chi Minh City Treasury has enough money to support residents displaced by the Thu Thiem Project as promised, an official said, rejecting speculation that payment delays have been caused by fund shortages.

Hua Ngoc Thao, director of the compensation board in District 2, told Thanh Nien yesterday that the city government grants his board VND50 billion (US$2.86 million) everyday to pay land compensation to displaced residents.

The board has so far given out a total of VND528 billion ($30.2 million) for compensation claims by 169 households forced to move by the urban development project as well as additional support money for 166 of the cases, he said.

Under a new decision by the city government, displaced residents are provided additional support funds, apart from land compensation, to help cover their expenses when buying new homes or land.

But while 166 displaced District 2 households have been given the extra money, up to 3,000 have been promised the funding. Scores of people wait at the board's office everyday for answers about the delays.

The total extra funding yet to be disbursed is the largest amount of such funds ever set aside in HCMC.

Hong Mien from Thu Thiem Ward said she and other displaced residents have waited to claim their support money for more than a month.

"They keep promising [to pay] the next day and then the next day, instead of telling us when exactly we can get the money," she said. "It's a waste of time."

Displaced resident Nguyen Van D, who wished not to have his full name mentioned, said all the displaced residents know the city has budgeted a large sum of compensation and additional support money for the Thu Thiem project.

"So if [the board] runs out of money now, they just need to explain that to us and give us an exact date to come back for our money.

"They should not give one reason after another."

Nghiem Linh Cat, a former Binh Khanh Ward resident who now lives in District 10, said he was officially promised the additional money on February 4 and was supposed to receive it within 10 days at the latest.

"But nobody called me to pick up the money. I've gone to the office several times a week only to be told to wait. "I don't know how much longer I'll have to wait."

Thao admitted that there were delays in paying compensation and additional support money to displaced residents. But it was because the process had to be carried out carefully to avoid any wrongdoings, he said.

He said cases involving disputes over land use rights could not be handled by his board until a consultation with the city's Department of Justice. Thao said the priority now is to grant land clearance compensation for displaced residents first and then provide support funds later.

The support funds for the first group of displaced residents, who were promised the money on February 4, like Cat, would be handed out by the end of this month, he said.

Mai Van Nguyen from the District 2 People's Committee said the city government planned to give the district another VND2 trillion ($114.38 million) to pay residents displaced by the Thu Thiem project.

The Thu Thiem Project in District 2 occupies 657 hectares in five wards - An Khanh, Thu Thiem, An Loi Dong, Binh An and Binh Khanh. It is estimated that more than 10,000 families must move from the site of the new township-to-be.

Vietnam does not allow formal land ownership but grants land use rights only.

Thanhnien News

HCM City issues urban architectural management regulation for four streets around Independence Palace

2009-03-19T20:51:00.001-07:00

The city government has issued the urban architectural management regulation for four streets around the Independence Palace in Ben Nghe Ward of District 1.

It is surrounded by Nam Ky Khoi Nghia – Nguyen Thi Minh Khai - Pasteur - Alexandre de Rhodes Streets, Nam Ky Khoi Nghia – Han Thuyen – Pasteur – Nguyen Du Streets, Pasteur – Nguyen Thi Minh Khai – Pham Ngoc Thach - Alexandre de Rhode Streets and Pasteur – Han Thuyen – Paris Commune – Nguyen Du Streets.

With a total area 63.099m2, the above streets are in the city’s downtown and next to valuable landscapes and historical works such as the Independence Palace , the April 30 Park, and the Notre Dame Church. Their architecture is mainly low- story buildings and villas.

According to the regulations, new construction design or renovation must guarantee uniformity and harmony. Between blocks over three-stories, they should have a minimum of two meters separation. Works must have uniformity of floor height, color and be harmonious with neighborhood works. Outside colors must harmonize with the area’s architecture and not use dark colors and not use materials of high reflected light exceeding 70% of the entire front of the building.

HCM City

US$1 billion at least injected in real estate

2009-03-17T08:25:00.001-07:00

One billion US dollars has been reportedly poured into ten big projects in the real estate market so far this year.

Real estate projects still thirsty for money

In February, Vietcombank lent US$44 million to Indochina Land to fund the investor’s development of the complex of trade centre, office and apartments in Hanoi, capitalized at US$145 million.

The Bank for Investment and Development of Vietnam (BIDV) in January lent VND5.7 trillion to the Hoang Anh Gia Lai group which Hoang Anh will inject in its real estate, rubber, minerals, and hydropower plants in 2009-2011. This includes VND650 billion in short term capital, while the remaining are medium and long term loans. In mid-February, Fei Yueh Vietnam kicked off its project on five star hotel Nikko Saigon on Nguyen Van Cu Road in district 1, HCM City, which has the investment capital of US$100 million.

Banks have resumed funding real estate projects so far this year. If considering the ten large real estate projects in Hanoi and HCM City alone, it is estimated that close to US$1 billion has been injected in the real estate market. Meanwhile, the total sum of capital injected in the real estate market in 2008 was VND115 trillion, or US$6.7 billion. As such, the US$1 billion worth of capital injected in the market so far this year shows that investors and bankers still remain hesitant with real estate investments.

Meanwhile, bankers, when asked about the plan to fund real estate investment projects, all said that they are ready to provide loans, provided that the projects are feasible.

Vietcombank’s Chairman Nguyen Hoa Binh said that Indochina Plaza Hanoi proves to be a good project that Vietcombank has decided to fund.

General Director of Techcombank Nguyen Duc Vinh also said that the bank is providing loans selectively.

Vo Dinh Quoc, Deputy Director of Dien Luc Real Estate Joint Stock Company, said that a lot of projects have been kicked off with the funding from financial institutions, but many others have been transferred to other investors, though the interest rates have become at ease for the last few months.

Banks pushing up loans to fund house purchases

The difficulties in accessing bank loans have prompted real estate enterprises to seek capital through bond issuance.

In early 2009, Hoang Anh Gia Lai issued VND350 billion worth of bonds. Vinaland has issued 100 housing saving certificates to mobilize capital for its projects.

While keeping cautious with funding real estate projects, bankers seem to open their doors widely to welcome individuals who seek loans to purchase houses and apartments. Most bankers said that they plan the loans worth several trillions of VND to fund the purchases. Vietcombank is now working with Indochina on providing loans to the buyers of Indochina Plaza Hanoi’s apartments.

Vinh from Techcombank said that the bank will reserve between VND1.5-2 trillion for the program on funding new house purchases and repairs.

Tran Phuong Binh, General Director of East Asia bank, said that the bank has reserved VND4 trillion for consumer credit. An Binh bank has launched a promotion program under which borrowers have the chance to get the prizes in gold.

As such, if a bank has VND1.5-2 trillion for the program on funding house purchases on average, the total capital to be injected in the market would be between VND65-86 trillion.

Explaining why bankers push up the loaning to fund house purchases, analysts said that the capital is being provided to those who really have the demand for accommodations. The borrowers are the ones, who have income independent to the real estate market, i.e. the income is not influenced by the real estate market’s ups and downs.

Vietnam Net

New real estate firm lists on HoSE

2009-03-17T08:24:00.001-07:00

Binh Chanh Construction and Investment Company (BCI) yesterday became the latest listed firm on the board of the HCM City Stock Exchange, bringing the total number to 175.

Having a charter capital of VND542 billion (US$31 million), the BCI has several foreign insitutional shareholders, accounting for over 20 per cent of the total equities. The State holds 28 per cent.

The company focuses on real estate business, investing in developing residential areas, industrial parks as well as industrial and transportation projects.

The company has completed projects including the 81-ha An Lac Binh Tri Dong Residential Area, the 49-ha Tan Tao 4 Residential Area and the 100-ha Le Minh Xuan Industrial Park in HCM City.

Others under development are the Dam Sen Complex, the expansion of Le Minh Xuan Industrial Park and several residential projects, all in the city.

Currently the company is a partner in various businesses, contributing 20 per cent or nearly $4.8 million in a joint venture with a French company for the Big C supermarket system in Viet Nam.

Additionally, it represents 70 per cent in the Bach Binh Real Estate Company, which has a charter capital of VND300 billion.

Last year the company netted a profit of VND129 billion, 88 per cent of the year’s target, but up 87 per cent compared to 2007’s figure, according to general director Pham Minh Duc.

He expects this year’s figure will reach VND199 billion. — VNS

Vietnam property market shows signs of recovery

2009-03-16T02:51:00.001-07:00

by News Desk

The real estate market is confident that prices will recover after a long cycle of decline in both HCM City and Hanoi. In the capital city, nearly 400 not-yet-built apartments in Keangnam Tower were sold not long after construction on the building started.

Lots in the Van Phu Urban Area and Xa La high-class apartment projects in Hanoi s newly-merged Ha Dong city have also been magnetic to investors, and prices have gone up nearly 20 per cent since Tet. Last year, investors paid little attention to these and other projects, as land prices were on a
heavy decline.

Moreover, property around these projects has also been selling like hot cakes.

One of Hanoi´s hottest realty projects is the Van Khe Urban Area, located next to the popular traditional silk craft village of Van Phuc, Ha Dong.

In just a few weeks, land prices in the area skyrocketed by nearly 30 per cent against the third quarter of last year. Many investors regretted selling so early, when land prices were still relatively low and bank interest rates too high.

In HCM City, the markets significant fall over the past year has helped balance supply and demand, prices are now at a more realistic level; apartments have become significantly cheaper.

Apartments in Van Do, for example, which is several minutes away from the centre, are now going for 20 million VND (US$,1140) per sq.m; they were at 30 million VND per sq.m before the decline.

The 40 per cent price drop of the Hoang Anh Gia Lai apartments has also caught investors attention.

Pundits are saying that while the securities market plummets, the prices of gold and dollars are fluctuating unpredictably, moreover, bank deposit rates are too low, and the real estate market has become a safe and modestly profitable option for idle capital.

Another positive factor is that the prices of construction input materials such as steel, cement and brick have also been going down.

The real estate market is seeing several favorable factors that hint at a recovery such as lower prices and bank interest rates.

Despite the improvements, many investors are still concerned that tax increases related to transferring real estate, in accordance with the Law on Personal Income Tax and Trading of
Property that was recently amended, will take effect soon and send the market into another slump.

HCM City issues urban architectural management regulation for four streets around Independence Palace

2009-03-14T08:20:00.001-07:00

HCM City

Vietnam fund managers keep one eye on US health

2009-03-14T08:17:00.001-07:00

The US economy’s health is a key factor in considering investment in the Vietnamese stock market, fund managers have said.

Pham Do Chi, deputy general director of VinaCapital Group, the nation’s largest investment firm, said the US economic situation influences the Vietnamese market since a slump in exports to the world’s largest economy means many listed firms would be hit.

His firm is cautious about investment here as the US economy is still in recession, he said.

“Some optimistic analysts think the US economy will recover by the end of this year,” said Chi. “I once thought the same. But now I have changed my mind. I think it will recover by mid-2010 at the soonest.”

He said though Vietnamese shares follow US trends, it does not mean that the market always tracks overnight gains or falls on Wall Street.

Nguyen The Lu, general director of Saigon Asset Management (SAM), said if the local market drops further, SAM would trim its holding in export companies, financial firms and banks since they are likely to struggle this year.

According to fund manager Dragon Capital, Vietnam remains at the mercy of international trends, and rallies will need to get confirmation from offshore.

The VN-Index, Vietnam’s major stock index, slumped 66 percent last year and was Asia’s worst performer as the economy grew at its slowest pace since 1999, hurt by slumping demand for the country’s exports.

Emerging-market equity investors withdrew a record US$48.3 billion from their funds in 2008, said US-based EPFR Global, which provides investment flow data globally.

Speaking about real estate investment, Chi said fund managers are now investing in medium-priced buildings and three- and four-star hotels instead of high-end office buildings and five-star hotels unlike earlier.

Lu said 40 percent of his company’s real estate fund is now in cash, explaining it is being very careful for fear that real estate prices could decrease further.

Dominic Scriven, managing director of Dragon Capital, said since Vietnam has some advantages like high domestic consumption, what has happened in the country is not as bad as in the US.

Lu said: “At 10:00 p.m., I can see Lotte Mart supermarket in Ho Chi Minh City’s District 7 still crowded. Restaurants in the city are still busy. It is very different to what is happening in the US.”

Source: Dau Tu Chung Khoan

Foreign JV formed to develop major shopping - entertainment venue

2009-03-11T01:21:00.001-07:00

ECC Group of the Netherlands and Singapore's GuocoLand Vietnam have announced a US$33-million joint venture to build a major shopping and entertainment destination in the southern province of Binh Duong.

The Dutch property conglomerate will hold an 80% stake in Promenada @ Canary and the Singapore real estate developer the remainder.

Tjeert Kwant, chief executive officer of ECC Group, said at a function held in HCMC yesterday to publicize the joint venture that the Promenada @ Canary project would have four stories with total retail and entertainment space of 82,000 square meters.

The venue will include a supermarket or hypermarket concept, an international food court, multiplex and entertainment facilities, fitness and other leisure concepts, fashion, sports, electronics and home furnishing stores, IT superstore, kids education zone, play area and toy superstore, and retail consumer services.

Promenada @ Canary is part of the fully-integrated development The Canary next to the Vietnam-Singapore Industrial Park 1 in Binh Duong, about 16 km from HCMC by National Highway 13, according to a statement from the joint venture.

The statement says phase one of the project is expected to be ready in the third quarter of 2011 and phase two in the fourth quarter of 2012. The venture claims Promenada @ Canary will become "Vietnam's first international standard destination mall".

"Promenada @ Canary given its size and concept will create a new standard for retailingin Vietnam and will introduce new lifestyle choices for the urban residents of HCMC and Binh Duong," said Kwant.

The project will target residents in Binh Duong, HCMC and neighboring provinces.

More than 3,000 people will be employed at the forthcoming shopping and entertainment venue.

The Canary, which got off the ground in late 2007, also comprises 1,200 units of apartment, a hotel, international educational institutions, supporting commercial facilities and a sports complex.

It will create a fully-integrated environment for residents to live, work and play, says the statement.

GuocoLand Vietnam country general manager Lawrence Peh said the construction of three apartment blocks of eight to 12 stories with 1,200 units was on track and that 235 units would be delivered to buyers late this year.

Saigon Times

HAGL says pretax profit to rise 14 percent

2009-03-11T01:14:00.001-07:00

Hoang Anh Gia Lai Joint Stock Co., the third-biggest company on the Ho Chi Minh City exchange, said it expects pretax profit to rise 14 percent this year. Its shares rose the most in more than two months yesterday.

The furniture and property company expects pretax income to reach VND1.15 trillion (US$66 million), chairman Doan Nguyen Duc said in a phone interview from his Pleiku town headquarters. The stock rose 4.9 percent to VND54,000, the most since December 30.

"This is the lowest target of our profit and if the market situation is favorable, the profit of the company will be much higher," Duc said yesterday.

The expected gain in profit may help the company as it plans to accelerate the construction of two luxury apartment projects, including the VND2.4 trillion Phu Hoang Anh estate and VND2.3 trillion Riverview development.

"Although the projects have not been completed, clients have registered to buy almost all the apartments and that will significantly contribute to this year's profit," he added.

Thanhnien News

Central Highland city makes headway towards development

2009-03-10T00:30:00.001-07:00

Thirty-four years after liberation, the Central Highland city of Buon Ma Thuot in Dak Lak province has made drastic changes with many infrastructure projects getting off the ground. The city has become an attractive destination for domestic and foreign investors.

Buon Ma Thuot was a small town with approximately 30,000 residents on its liberation day (March 10, 1975). It has now been upgraded to a second-tier city which is home to more than 330,000 residents. Many infrastructure projects have been built to lure domestic and foreign investors.

Pham Van Thanh, a local resident in Tu An ward, says that the city has made a lot of changes since it was liberated.

“Currently, the city has 125 roads and streets in total, a four-fold increase against the figure in 1976. All the roads and streets have been paved and installed with modern lighting systems. Many supermarkets and high-rise buildings have been built, meeting its residents’ demand for a comfortable life.”

Considered the capital of the Central Highland region, Buon Ma Thuot is already an attractive investment destination for domestic and foreign businesses.

Do Thai Co, director general of the Hoang Anh Dak Lak Joint Stock Company, which built the first high-end apartment building in the city, says that he believes in the city’s future prospects for development.

“At present, housing demand here is still limited, but I think the property market will grow and flourish in the next few years,” says Mr Co. “We are preparing to carry out a second building project to be capitalized at VND200 billion in the city. The project is expected to get off the ground in 2010.”

More than 30 trade and services projects are being implemented in the city with a combined investment capital of nearly VND2,400 billion. Major projects include the Hoang Anh Gia Lai high-rise building, the Saigon-Ban Me hotel, the Swiss-Bel hotel, the Buon Ma Thuot central market, the Phu Xuan plaza centre, the Buon Ma Thuot Co-op Mart and the Intimex-Fuso Machinery Mart.

Michael Bischof, vice president of the Swiss-Bel hotel group, says that his group has decided to create a joint venture with Dak Lak Rubber Company to build the first four-star hotel in the city.

“The Central Highland region is an ideal tourist attraction that has not yet been fully tapped. The building of the hotel is a way to promote the city’s tourism potential,” he says.

Recently, Buon Ma Thuot Co-op Mart, which is an affiliate of the Saigon Co-op chain, received a record high of more than 20,000 visitors and consumers on its inauguration day with 3.2 billion worth of goods sold.

“Buon Ma Thuot City and Dak Lak province in general are potential markets which have higher purchasing power than other localities in the region,” says Nguyen Anh Tien, vice director of Saigon-Buon Ma Thuot Services Ltd Co. “I think our investment is on the right track.”

With modern infrastructure projects taking shape, Buon Ma Thuot is the promised land for domestic and foreign investors.

VOV News

Big real estate projects kicked off

2009-03-10T00:29:00.001-07:00

Many big real estate developers believe it is now the right time to start projects aimed at long-term profit. Investors don’t think the current quiet market is a catastrophe. The demand for accommodations is on the increase while construction material prices have been decreasing.

Minh Viet Company has recently kicked off Tricon Tower, one of the first projects in Bac Anh Khanh urban areas. This is expected to be a complex of three 45-story towers designed as high-grade offices and apartments. The project has the total investment capital of $145mil.

Indochina Plaza Hanoi, a trade centre, office, apartment project has also been restarted after a period of interruption for many reasons. Though the real estate market remains quiet, the investors still successfully persuaded Vietcombank to give a loan worth $44mil to develop the project.

The funding of the project by a commercial bank showed that opportunities in the real estate market can be realised not only by real estate investors. Therefore, the fact that Vietcombank, which has never been thought of as a big lender in real estate, has agreed to fund the project, is really noteworthy.

Tran Ngoc Quang, General Director of Vinacomex-ITC, an investment and tourism development joint-stock company, said that it is difficult to predict when the real estate market will recover. However, this does not mean that investors should wait and see; they need to take action now to overcome difficulties and prepare for the recovery period.

Quang said that the demand for accommodations keeps rising, which also means that the market is very large.

That explains why the Cai Gia-Cat Ba project invested in by Vinaconex, capitalised at over $500mil, has still been implemented despite the gloomy market. Most recently, Vinaconex-ITC has spent several billion VND to develop a real estate trading floor serving long-term business development.

When asked why Minh Viet kicked off a big project at the moment, when the market tendency remains unclear, Edward Minh Chi, Chairman of Minh Viet, said that he believes the market will warm up by the end of this year after undergoing big difficulties in Q2 and Q3. He said that the market will absolutely have recovered by 2011.

“Investors need time to prepare for the market, and it is now the right time to do that,” he said.

While some investors complain that the continued price falls of real estate have made it difficult for them to carry out projects, others believe that it is now the right time to invest, especially as construction material prices and labour cost remain at low levels. As credit interest rates have decreased, real estate developers can easily access bank loans if they have good projects. The investors believe that real estate price decreases are not a catastrophe at all, but a business opportunity.

Vietnam Net

The margin narrowed

2009-03-08T19:27:00.001-07:00

"Choose the right price" is a popular local television game show. Joining the game, the player is challenged to identify exact prices of consumer goods such as shampoos, kitchen wares, perfumes and beverages among others.

Although the player gets hints from the audiences at the studio before giving a final decision, they often miss chances to be the winner of the game. The property market is just like that if it comes to looking at the apartment segment. The real prices of apartments are challenging the homebuyer to guess.

The apartment prices are on the decrease under the pressure from dampened sentiment. Some project developers have begun slashing selling prices of apartments. Some say this is the right time to grasp the opportunity while others claim that such declines have yet to reflect the real prices, so they will continue for some time.

Margins narrowed

After a long period of overheating, the property market has been experiencing the fallout from the past credit crunch and then the economic slowdown, with land and housing prices taking a nosedive. Some property firms have been making efforts to pull themselves of the blues.

Several weeks ago, HAGL Land stirred up the quiet market with a surprise announcement by slashing prices of apartments by a stunning 40% to attract potential buyers. Some 500 apartments of the two apartment projects including Hoang Ann Riverview in Thao Dien Ward in District 2 and Phu Hoang Anh in HCMC's Nha Be District were on the promotion list.

Back to 2007 when the property market was seeing prices running wild, HAGL Land quoted Hoang Anh River View apartments at US$2,300 per square meter and Phu Hoang Anh ones at US$ 1,800. However, until recently the prices have slid to as low as to US$1,350 and US$1,250 respectively. Explaining the huge price cuts, the company said prices of building materials ware falling, coupled with the low prices the company enjoyed when acquiring land for the projects.

Following HAGL Land, Dat Xanh Real Estate Company has been running an advertising campaign for its SunView Apartment in Tarn Phu Ward in HCMC's Thu Due District. There are 200 apartments put on sale with prices slashed to US$764 per square meter from the US$ 1,300 a year ago.

In another project, Daewon Hoan Cau Housing Development Joint Venture Company is offering a price of US$2,000 per square meter for the Cantavil Hoan Cau project on Dien Bien Phu Street in HCMC's Binh Thanh District. This is the project which sparked a controversy several months ago as a property service company released research results showing a considerable decline in prices in the project. A representative of the Daewon Hoan Cau denied it, saying such information threw the company into a difficult position.

Commenting on the most recent apartment price reductions, Le Tham Duong, head of the Administration Faculty of the HCMC Banking University, said it was just an excuse. Property companies said they were supporting the Government's economic stimulus program, but in fact, they have no choice but to lower prices to either recoup capital or restructure their investment portfolios, he said. Slashing prices, Duong said, is the wisest decision under the current circumstances and they have to narrow their expected profit margin to survive troubled times.

Financial woo

To some extend, the fall in prices of apartments is sending out a positive signal to the market as there are many transactions reported in the last few weeks. However, this would not have happened if there had been no promise of financial support from banks. Most of the projects that are on the price promotion rampage have got pledges from banks to offer loans worth at least 70% of the value of an apartment.

For example, Sai Gon Thuong Tin Real Estate Joint Stock Company (Sacomreal), which is distributing some 300 Hoang Anh Riverview apartments, is supporting the homebuyer with loans from Sacombank, Vietcombank and Bank for Investment and Development of Vietnam (BIDV), with repayments to be made for 10 to 20 years.

Phu My Hung Corporation (PMH) early this month started selling apartments in the Riverside Residence project at VND37 million per square meter. The company said 128 apartments were snapped up within one morning. Twelve banks were backing the company by providing loans up to 70% of the value of an apartment for the buyer. The term of loans is up to 20 years.

Besides prices, financial support is a vital condition for both project developers and homebuyers. With the market becoming busier in the last several weeks, some say the market is being warmed up, but others show a conservative attitude as prices of apartments remain high regardless of the most recent drops.

However, the current market conditions are still for a certain group of moneyed people since many people with limited finances but real demand for a home are still seeing the current apartment prices unaffordable.

Saigon Times

Another IZ project commences in Ba Ria-Vung Tau

2009-03-08T19:26:00.001-07:00

Construction of the Phu My 2 Industrial Zone (IZ), covering over 1,000 ha of land, commenced on March 6 in Phuoc Hoa commune, Tan Thanh District, in the southern province of Ba Ria-Vung Tau.

The project, worth more than 3 trillion VND, is funded by the Vietnam Urban and Industrial Zone Development and Investment Corp (IDICO).

IDICO has completed all of the necessary investment procedures for infrastructure construction and has started the construction of infrastructure facilities with investment totaling 700 billion VND.

Four investors have already registered to lease land in the IZ. The investment projects include a 1.1 billion USD hot steel rolling project and a 500 million USD steel project, managed by the Posco group from the Republic of Korea, a 180 million USD steel ingot project by the Taiwanese FUCO Steel Company and a 30 million USD construction materials production project by Hoa Sen company.

Vietnam Net

Downturn 'an opportunity' for office tenants

2009-03-06T19:13:00.000-08:00

The downturn in the real estate market has created huge opportunities for office tenants, according to real estate services provider Savills Vietnam.

As a result of rapidly diminishing demand and increasing supply, the office market is in decline and has had a significant impact on rental values.

In HCM City, at the market's peak in 2008, grade B buildings were demanding rents of US$65-75 per square metre. They are now being marketed for $30-35, with room for further negotiation.

"An increase in supply and a decline in demand have meant that developers have had to start offering competitive rentals and large incentives to encourage new tenants and retain existing ones," Robert MacDonald, head of tenant representation and advisory services at Savills Vietnam, said.

"It is clear that tenants who have rent review or lease expiry provisions within the next 18 months will be able to benefit greatly from the prevailing trend as they will be able to negotiate aggressively with either their current or future landlord. This clearly was not the case 12 months ago when landlords still held significant influence over the market.

"We advise all companies to take advantage of the current situation by reviewing their operational costs, reassessing their future real estate needs, being creative in establishing how to minimise their overheads, and most importantly, ensuring that they are fully briefed on the market so that they arc entering negotiations in the strongest position possible." Office rents in the short to medium term would see further decline, he added.

The total supply of office space in the city in 2011 is set to grow more than 120 per cent compared to the end of 2008 (910,000sq.m).

Vietnam News

Phu My Hung sells out 128 condos

2009-03-06T00:29:00.000-08:00

Real estate developer Phu My Hung Corporation says it has sold all of the 128 condominiums in the second phase of its Riverside Residence project in Ho Chi Minh City's District 7.

Nearly 800 customers came to draw lots to buy the apartments of the project's Block A at VND37 million (US$2,117) or more per square meter on March 1.

One buyer, Tuong Vy, said the price was reasonable as the building has good facilities and is located at a beautiful site.

Customers are given access to loans from 12 banks which have signed contracts with the project investor. These banks lend up to 70 percent of the value of an apartment for up to 20 years.

Construction on the 18-storey Block A will start by the second quarter of this year and is expected to finish in 2010.

The Riverside Residence project, worth $200 million, consists of five buildings - A through E - with a total of 671 condos and 51 stores.

Thanhnien News

DP World's container terminal to be ready in September

2009-03-06T00:27:00.000-08:00

Dubai Ports World (DP World) plans to commission its Saigon Premier Container Terminal in Nha Be District in September, so HCMC should speed up work on infrastructure projects there, a DP World leader said yesterday.

Anil Wats, DP World executive vice president and chief operating officer, told city chairman Le Hoang Quan at the city hall that he was interested in the progress of dredging the Soai Rap River, and developing North-South Highway and other roads leading to the terminal.

As for the 60-km Soai Rap River, Quan said the city was dredging this river to facilitate the passage of ships to deep-water ports in Hiep Phuoc Urban Port Complex in Nha Be District, including the terminal of DP World.

However, the Soai Rap River has three 2-km stretches which are only five meters deep, obstructing the passage of large ships. "Hiep Phuoc will not be able to become a modern port town if its ports cannot receive giant vessels, while the Long Tau River is too narrow," said Phan Hong Quan, general director of the Tan Thuan Industrial Promotion Corporation (IPC), DP World's local partner in the Saigon Premier Container Terminal project.

"We started dredging the Soai Rap River in 2007. The first 10,000-DWT vessel entered Hiep Phuoc Port in January last year. But we are still dredging it at the moment," he said.

With DP World's financial support, IPC plans to dredge the river to ensure the average depth of 11 to 12 meters. With such a depth, Hiep Phuoc deep-water ports will be able to receive container ships of 30,000 DWT or even 50,000 DWT.

For the roads, both North-South Highway and Hiep Phuoc's road networks are not good. City chairman Quan said the city government would invest more to solve this problem.

Covering 40 hectares, the two-phase Saigon Premier Container Terminal project will need total capital of US$305 million.

In the first phase with 24 hectares needed, this container port will have a handling capacity of 800,000 TEUs a year, and this figure will rise to 1.5 million TEUs in the second phase. DP World replaced P&O Ports, the world's first largest group in seaport management, in early 2006 to develop this project.

Saigon Times

Real estate market remains uncertain in 2009

2009-03-03T19:12:00.000-08:00

2008 was a difficult year for Vietnam’s economy in general and the local real estate market in particular. From mid-2008 until now, the real estate market has been frozen and many analysts predict that there is no possibility of the market recovering this year due to the gloomy prospects for the global economy.

Difficulties remain

The difficulties Vietnam’s real estate market faced in 2008 have continued prolonging in the first few months of this year. The biggest difficulty is the shortage of capital. Many investors suffered heavy losses last year and could go bust. In addition, banks that provided heavy loans over the past two years have not been repaid yet. Meanwhile, many foreign-invested projects worth billions of dollars are unlikely to be implemented this year as many partners are confronted with financial difficulties.

In early 2009, there have been some positive signs for the real estate market to pick up as some banks have begun to provide mortgages again. However, economic expert Bui Kien Thanh elaborates that if the banks stop providing loans, many real estate enterprises will face bankruptcy, seriously impacting the banks. Recently, real estate prices have fallen but still remain high. This is attributed to the fact that a lot of properties in Vietnam have changed hands many times over, pushing up the prices each time.

Looking forward to the government’s demand stimulus package

In February, the Ministry of Construction submitted a stimulus package to the government to save the real estate market, with a focus on housing for low-income earners. A real estate expert Dang Hung Vo says that the package is a good idea but some issues need to be addressed to ensure it is effective. Firstly, it is necessary to know if the package is effective and how long it will last. Secondly, it is necessary to reform the management of the housing problem.

According to Mr Vo, to ensure long-term sustainable development, the stimulus package should be considered as an effort to attract more investment from companies that employ a large number of workers and from the workers themselves.

Focusing on building houses for low-income earners

A recent market study showed that there is an increasing demand for accommodation amongst low-income earners. Economists say that to kick start the domestic real estate market, it is essential to focus on building houses for this section of society.

According to the Ministry of Construction, each low-income earner has a living space of only 7-8 sq.m on average, while they need at least 10 sq.m per capita. At present there is an imbalance between the supply and demand for accommodation from low-income earners. This is attributed to investors who are keen on building up-market apartment buildings to earn high profits.

Dang Hung Vo says that it is necessary to launch promotional campaigns and offer preferential treatment for projects to build houses for low-income earners by reducing the tax on land use and providing low-interest loans. However, tough inspections need to be stepped up to ensure that low-income earners can access these preferential loans and tax relief is an effective way of giving a helping hand to low-income earners, he adds.

However, as he argues, there remain some flows in the land-use tax that cannot prevent speculation. Therefore, it is important to impose higher taxes on potential investors involved in projects to build houses for the poor.

Regarding the purchasing power of low-income earners, Bui Kien Thanh says that in the 1930s the US offered preferential loans for low-income earners to buy houses over a long time. Also, in Singapore, businesses raised funds to help their employees buy their own houses, while many Swedish people set up their own cooperatives to build houses. Following the Swedish model, the Vietnamese Cooperative Alliance has recently decided to build houses for its own members.

http://english.vovnews.vn/

Office market shaken by economic crisis

2009-03-02T00:12:00.001-08:00

Ho Chi Minh City office demand is sinking as the economic slump has forced many businesses to downsize or shelve expansion plans.

Some businesses now prefer to save money by renting space from individual home owners rather than at office buildings. Le Cong Dinh, a managing partner at DC Law Finn, said the group had leased a house rather than renewing a rental contract at the high-end Sun Wah Tower last year.

"The new space is twice as large but eight times cheaper," Dinh said.

Though renting at Sun Wah had its perks, his company could not afford to pay the US$75 a square meter a month.

Exodus

The marketing director of a popular office building in downtown HCMC who wished to go unnamed said many tenants were leaving his building.

He said up to 30 percent of offices at high-end buildings were now unoccupied while the rate is 40-70 percent at lower-grade buildings.

Many customers have cancelled advance bookings at newly completed office buildings, he said.

Billboards offering offices for lease line HCMC's biggest commercial streets.

Ups and downs

Office rents are around $60 per square meter on average at high-end buildings while prices at second-tier buildings are usually around $25-35. Grade C level buildings are renting for some $14-22 per square meter.

Last year, the average monthly rent in top-tier buildings, including Sun Wah and the Metropolitan, soared to more than $80 per square meter.

Despite falling office rents since then, Dinh from DC Law said businesses that have already moved into individual home owners' spaces may not return to office buildings.

He said home owners could offer longer-term contracts and businesses had to spend money decorating the new space for use.

He also said that office rents are still too high despite the drop.

Le Ba Thong, general director of interior decorator 111 Corporation, which holds more than 70 percent of the office decoration market share in HCMC, said his firm's business had not been affected much during the 1997 Asian financial crisis as customers who transferred from high-end offices to lower-grade offices still needed interior decoration services.

But now, the whole office leasing market is quiet, he said.

With higher supply and lower demand, property firm CB Richard Ellis (CBRE) Vietnam expects office rents to fall to $30 per square meter for high-end buildings, $20 for second tier buildings and $10 for Grade C facilities.

Supply and demand

A recent report from the property firm said the supply of office space in HCMC would increase 122 percent to 2 million square meters in 2011.

CBRE Vietnam Head of Asset Services Fiona Saunders told Thanh Nien Daily the apartment leasing situation in Vietnam was a matter of serious concern.

As a fallout of the global economic downturn, the limited tenant pool, reduction of company headcounts and a restriction in business expansion were major difficulties facing the city's office building leasing market, she said.

Such difficulties would force new landlords to aggressively cut rates by as much as 30 percent to compete with those who already hold market shares, she added.

At a seminar in HCMC last month, Saunders told the media that the continuing global economic crisis meant that landlords had to stay more informed and be flexible in order to take advantage of any and all opportunities that might arise.

Thanhnien News

Real estate developers’ money now flowing to low-cost projects

2009-03-01T09:02:00.001-08:00

Real estate developers are drawing up plans to make investments in apartment projects which have sale prices fit to medium-income earners, which is considered a wise move.

Though commercial banks have resumed loaning to the real estate sector with soft interest rates, experts have pointed out that real estate developers will not be able to revive the market with only bank loans. Commercial banks are believed to provide loans only to the investors who commit to complete projects soon and have good sales plans.

Therefore, real estate developers all have to build up suitable investment strategies that fit new circumstances.

Truong Thai Son, Deputy General Director of Hoang Quan Real Estate Corporation, said that in order to rescue themselves, real estate firms need to reduce production costs, diversify products and apply new technologies, which help make products with the quality acceptable for medium-sale prices.

Nguyen Hiep, Chairman of the Hanoi Urban Area and Housing Development Corporation (HUD) also said that investors should now focus on medium-grade apartments, affordable by those who have a real demand for accommodation.

After three years of making investments in medium-grade houses, HUD has realized that this is a very potential and attractive segment of the market. HUD plans to continue developing low-cost projects in new urban areas.

Nguyen Truong Tien, Deputy General Director of the Hanoi Construction Corporation, said that previously, investors rushed to build high-grade houses, the market segment which serves only 10% of Vietnamese population. Meanwhile, in new conditions, investors should target the majority of customers, and bring apartments to those who really have demand for accommodations.

A lot of investors have marketed products with reasonable sale prices. Megastar Dominium Hoa Binh Park (Megastar Dominium HBP), invested by Megastar Land, a member of Megastar Group, is an example. The 25-storey project, located near the big Pham Van Dong Road, includes 336 high-quality apartments with areas of 76, 78, 88 and 92 sq m(with 2-3 bedrooms), has sale prices between VND16 million and VND19 million per sq m.

Nguyen Chi Hieu, Managing Director of Megastar Land, said that with these sale prices, Megastar Dominium HBP still can ensure its high quality, while targeting small families with few members.

VietRees, a real estate consultancy firm, said that the tendency of developing low-cost apartment projects has become clearer recently.

VietRees’ Analysis Director said that low-cost projects are able to be sold quickly, thus allowing investors to get back capital quickly.

Experts have also pointed out that low-cost projects, not luxury products, will help revive the real estate market.

Vietnam Net

Guarantee mechanism put difficulties on businesses

2009-02-26T09:05:00.001-08:00

The government has released a credit guarantee decision in an effort to help businesses more easily access bank loans. However, experts say that the overly strict requirements of the credit guarantee mechanism will make many enterprises unable to access loans.

“The government’s policy on providing credit guarantees, through the Vietnam Development Bank (VDB), to help small- and medium-size enterprises (SMEs) get loans to expand production and struggle against the economic difficulties proves to be a necessary move at this moment. However, the implementation of the policy remains problematic,” said Nguyen Thanh Son, Deputy Chairman of SCM Finance Company.

The biggest problem, according to Son, is that VDB does not provide guarantee services for real estate development.

“The development of the real estate market will help lead to the development of many other industries and business fields, especially the production of construction materials (cement, bricks and steel). If Vietnam does not support the real estate market’s development, the credit guarantee programme will be less effective,” he added.

Son went on to say that investors have injected money in a series of construction material workshops, hoping that the real estate market will recover soon. If real estate development is not supported by the state, construction material production will not be able to develop, as products will have no outlets.

Under the guarantee mechanism, VDB will only provide guarantees to enterprises which have chartered capital of under VND20bil ($1.1mil) and fewer than 500 workers.

According to Nguyen Phuong Dung, Director of Thanh Phuong Joint Stock Company, it is necessary to loosen the requirements so that more businesses can get guarantees from VDB.

Sharing the same view, the Vietnam SMEs Association said that with the current requirements, garment, footwear and handicraft companies would not be able to get a guarantee because they always employ more than 500 workers.

A representative of Ha Thanh Construction Company said that as only businesses which have financial difficulties need guarantees from VDB, in order to effectively support businesses in difficulties, it is necessary to loosen the requirements.

One of the six requirements for getting a credit guarantee is that enterprises do not have overdue debts. The regulation, according to Ha Thanh Company, closes the door to the guarantee service on construction companies, since most of the companies in the field have overdue debts.

Meanwhile, commercial banks also complain about the mechanism to provide guarantee for credits. Under the current regulations, VDB will make decisions about whether it will provide guarantee service within 60 days after it receives applications for credit guarantees.

Pham Xuan Hoe, representing Vietinbank, said that if it takes 60 days to get a response on a decision about the guarantee service from VDB, commercial banks will not be interested in giving loans.

VietNamNet/DTCK

Vietnam’s roads need VND70 trillion a year

2009-02-25T20:00:00.001-08:00

The Vietnamese Transport Ministry has estimated an annual average investment of VND66.8 trillion in the national road system from now to 2020 and beyond 2030 to further improve its carrying capacity.

In its transport plan for the period, the ministry suggests VND10 trillion be put aside for developing national highways and VND22.67 trillion for expressways.

The capital is expected to be mobilized through Build-Operate-Transfer, Build-Transfer-Operate and Build-Lease-Transfer contracts.

Under the plan, 20 expressways with a total length of 5,800 km will be built in the set period, of which 2,500 km will be built before 2020. Construction of transnational expressways and major transport corridors will be prioritized.

The total length of the national road system is 230,490 km, or 0.68 km per sq .m, which is much lower compared to that in developed countries, according to the Transport Ministry’s Road Department. Forty-one percent of the road system lies in urban areas.

VOV News

Infrastructure project built on broken laws: inspectors

2009-02-25T19:58:00.000-08:00

Illegalities ranging from no-bid contracts to withholding land compensation have been nothing out of the ordinary at a US$126 million project near Ho Chi Minh City, the Government Inspectorate has found.

The Inspectorate released the conclusions Tuesday after investigators wrapped up their probe of a major construction project in Binh Duong Province, said Deputy Chief Inspector Le Tien Hao.

Inspections of the 4,200-hectare Binh Duong Industrial, Service and Urban Complex (ISUC) project found the provincial People's Committee had given land to ill-equipped and unqualified companies while other local agencies had failed to collect land-use taxes and had allowed construction to begin in several places without proper permits.

Additionally, scores of displaced residents had yet to receive compensation for their losses, said investigators.

Hao said Prime Minister Nguyen Tan Dung had instructed the Binh Duong People's Committee to collect nearly VND64 billion ($3.67 million) in back taxes from individuals and organizations involved in the project.

He also asked the committee to issue "harsh measures" against those involved in the wrongdoings.

In line with Dung's orders, the committee will also have to recompense compensation after being relocated to other areas to make way for the project.

Compensation will also have to be adjusted for inflation, the Prime Minister instructed, as much of it was supposed to have been disbursed years ago.

The VND2.2 trillion ISUC project aims to build industrial parks, service-related commercial zones and urban residential zones to support technology manufacturers and other production in the area.

Host of violations

Though ISUC was not approved until 2005, inspectors found the Binh Duong People's Committee had begun site clearance as early as late-2003. The provincial administration also broke the law by handing land to several investors without inspecting their credentials and financial capabilities, inspectors said.

Between 2006 and 2007, the hectares to the Binh Duong Production and Import Export Company (BDPIEX) and Tri Viet Media Corporation.

Although BDPIEX had paid no taxes on the land and has yet to obtain any official documents, the company used the value of the land to contribute capital in the formation of two new joint venture companies.

BDPIEX used 162 hectares, valued at $8.1 million, as a capital contribution to Phu My Development and Investment JSC while also contributing 150 hectares, valued at $9 million, to form Tan Thanh Development and Investment JSC, said investigators.

Inspectors said the provincial Department of Planning and Investment violated the Land Law and a Financial Ministry circular when it granted investment licenses to the two joint-venture companies.

The Binh Duong People's Committee also violated a government decree when handing land to Phu Gia Company and An Hoa JSC without inspecting their financial capacity, said investigators.

Inspectors also said the two companies then illegally transferred their projects to the HCMC General Import Export and Investment JSC and Hung Thinh Company.

Inspectors found that the only revenue Phu Gia Company and An Hoa JSC had received since their establishment in 2004 had come from projects at the complex.

The People's Committee further broke the law by handing over some 1,650 hectares to construct five resettlement areas and a new urban zone in no-bid contracts, said investigators.

Local authorities also failed to collect taxes properly and several investors had started construction without land-use certificates or construction permits, inspectors said.

Source: Thanhnien News

City to widen Hanoi Highway

2009-02-25T19:41:00.001-08:00

Hanoi Highway that runs through HCMC's eastern districts will be widened to 10 lanes and two parallel roads at an estimated cost of VND2.54 trillion, or nearly US$150 million, an official of the HCMC Department of Transport said.

Le Toan, deputy director of the department, said the project would be developed by HCMC Infrastructure Investment Joint-Stock Co., or CII. A memorandum of understanding to this effect was signed last year between the HCMC government and CII.

Under the agreement, CII will widen the highway to 153.5 meters at the section between Saigon Bridge and Binh Thai Junction, and to 113.5 meters at the section from Binh Thai to Dong Nai Bridge. The highway is now 60 meters wide.

The project will be developed under build-operate-transfer (BOT) form. Once completed in two years, the highway is expected to have a 10-lane main route and two parallel roads with three lanes on each side.

The project requires 120 hectares of clear land and is designed to cross Districts 2,9 and Thu Duc in HCMC and Di An District in neighboring Binh Duong Province. Nearly 2,500 households will be relocated.

The project aims to link HCMC with southeastern provinces as well as reduce congestion. The work will be carried out at the same time as the subway project from the inner city's Ben Thanh Market to Suoi Tien Park in District 9.

This year, the city's transport department plans to invest VND36 trillion, or US$2.1 billion, in key transport infrastructure projects as part of an effort to stimulate growth in the country's largest economic hub. The money, from domestic and foreign sources, will be spent on 37 projects whose work will begin this year.

Bui Xuan Cuong, head of the Department's Traffic Management Division, said delays in site clearance, poor management and low financial capacities of contractors are huge challenges.

Source: Saigon Times

Social housing regulations issued

2009-02-25T01:00:00.000-08:00

The HCM City People’s Committee has issued a regulation on the management and utilization of social housing in the city.

Accordingly, people to be considered for renting or buying social housing are public servants and officials, officers, and professional military staff who have at least three years’working experience at State units, have signed a indefinite-term labour contract and are paid salaries from the State budget.

Prices to lease social housing that are low-rise buildings in rural areas range from VND13,000/sq.m/month to VND20,000/sq.m/month. For apartment buildings, rental prices vary from VND15,000/sq.m/month to VND28,000/sq.m/month.

The minimum price to buy social housing is VND18,000/sq.m/month and at most VND30,000/sq.m/month, and buyers have to put down a deposit of 20% of the house’s value.

Social housing renters can only use the house while he/she is working for agencies and companies managed by the HCM City administration. Social housing can be used for accommodation purposes only and cannot be transferred in any form, except for inheritance.

Source: HCM City

43 residential estates projected in Thuan An district

2009-02-25T00:58:00.000-08:00

The Canary urban and residential complex invested by GuocoLand Vietnam. Photo: Internet

Thuan An district now has 43 projects on residential estates with a total area of 934.8 ha, 729.4ha of which were worked out compensation and site clearance, according to Mai Hung Dung, vice-chairman of Thuan An district People’s Committee. Construction of two out of these projects were also completed.

The district is also home to concentrated housing projects such as those of residential estates 434, 550, Goucoland urban and residential complex in Thuan Giao commune. Currently, the water drainage projects of Bung Hiep-Suoi Cat and Chom Sao-Suoi Don and the My Phuoc-Tan Van highway project are under area definition and resettlement arrangement.

Source: Binh Duong Daily

Real estate market report (Feb 13th, 2009 - Feb 19th, 2009) Is it time to invest in property?

2009-02-24T17:57:00.001-08:00

While other markets, such as security, gold, or dollar, are unstable, property investment is considered as a safer channel, thanks to the deep fall in prices.

Prices of apartments have fallen but remain high

The last week’s most prominent information was that investors actively decreased the apartment prices for projects such as Hoang Anh River View (from $2.200/sq/m to $1.350/sq/m). Apartment prices of the Phu Hoang Anh project were initially $1.500/sq/m at least, but are now at $1.250/sq/m. However, this strong decrease is only a specific phenomenon. According to experts, in spite of one year price decrease, the property prices in general, and apartment’s prices in particular, are still high.

On May 2008, Nguyen Tran Nam, deputy minister of Ministry of Construction, said: “Looking for an apartment with a price of VND20 million/sq/m is now very difficult. Meanwhile, the real investment cost for each square meter of a hi-end apartment building is only VND13 million – VND15 million”, implying that the final prices have been pushed too high. At this time, even when the apartment prices averagely fell by VND500.000 – 1.2 million/sq/m, such as Hoang Anh Gia Lai, their prices remained very high. Particularly in Hanoi, prices at the 34-floor Trung Hoa – Nhan Chinh building were up to VND32million/sq/m, and now down to VND31.5million/sq/m on its peak period. The Thang Long International Village (Dich Vong, Cau Giay) were at VND25million/sq/m, and decreased to VND22-23 million/sq/m. And Song Da, My Dinh area, has recently fallen to VND21-22 million/sq/m, while its previous price was VND26 million/sq/m. Besides, Vinaconex’s N05 apartment building project is under construction on Tran Duy Hung Street, although from issuing the documents to now, its price was kept at VND26 million/sq/m. With this price rate, the investors also equip these accommodations with more interiors and furnitures, such as air-conditioner, fridge, washing machine, or cooking system, etc.

According to many experts, building materials prices have continuously fallen during the past months, making this sector unstable. As a result, prices dropped to nearly 50% compared to those of 6-7 months ago. This evolution makes many people think that property prices will plummet more.

Some surveys from Real Estate Service Companies show that professional investors are still outsiders, as they were strongly affected by the 2007 property fever. The investors are now mainly new ones, who have long earned profits in banking and now shift to new investment channels, in order to generate new profits. For this reason, the capital flowing into the market is not so much. As estimated, property prices will continue to drop and realty transactions will only increase in a few areas.

Cheap-priced houses save the market

Le Tham Duong, dean of Business Administration Department, HCM City University of Banking, told that, because prices of gold and dollar are unstable, the security market continuously drops, and property investment is considered as the safest. However, Duong also added that this investment must be on the long-term, without surfing or speculation.

“Vietnam is a new market, still in its development period. The government is fostering investment calls for infrastructure development because people’s housing demand is really huge... Although its development isn’t stable yet, Vietnam’s property market is holding many good opportunities, and this time is suitable for returns on investment,” Peter Ryder, Indochina Capital’s general director said.

Asked about the 2009’s market trend, Dinh The Hien, economist, said that housing and land prices are still high compared to majority of residents incomes. Many people want to buy houses but they can’t. Meanwhile, residents’ demand is very huge. However, the low-cost housing segment is ignored by the real estate businesses because the expected profits earned are too small, and longer in returns, compared to hi-end apartments. Therefore, Hien told that invest in cheap-priced houses is an intelligent choice for real estate businesses, today. “2009 will be the right period for cheap-priced houses and this segment will save the market by escaping from the current “unmarketable situation”. However, it won’t look like the 2007’s fever,” Hien judged.

Le Hoang Chau, chairman of HCM City Real Estate Association, also said that, in the first quarter of 2009, cheap-priced housing segment for low and mid-income earners will start to be “hot”. Chau quoted that, despite the 2008’s property market continuously plummeted, many luxury apartment projects and foundation lands were unmarketable, and housing segment of about VND1 billion accommodations remains “hot”.

For instance, cheap-priced housing projects of real estate companies such as Nam Long, Dat Lanh, or Sacomreal attracted many customers, last year, because their prices were relatively reasonable. In early 2009, a series of project construction were sold at VND12 million/sq/m.

Office buildings for lease are unmarketable

According to surveys from many foreign and domestic property brokerage companies, renting prices of grade-B and grade-C office buildings are in a standstill and can drop because of inflation. As forecasted, in the second quarter of 2009, renting prices of grade-A office buildings would increase from $65 to $70 per sq/m a month, because of the lack of supply and the abundance of demand.

Meanwhile, grade-B and grade-C office buildings risk loosing their customers, and their prices are likely to plummet. Now, grade-B office buildings are at $40-$45 per sq/m a month. Similarly, prices of grade-C offices stand at $27-$30 per sq/m a month. The reason is that most of customers hiring grade-B and grade-C office building are medium and small businesses, which are facing cost and expenses reductions to survive.

The fact that office renting prices are in a standstill is not as important as the implicit risks of a deep crisis. More particularly, in Hanoi, the first quarter of 2009 alone is expected to receive 140.000 sq/m of grade-A and grade-B offices for lease.

Also, at this time in HCM City, the market will receive 40 new office buildings for lease. With such an abundant source of supply, with a context of many businesses trying to overcome difficulties, with less and less businesses investing in Vietnam, and with a decreasing demand of offices, many office buildings become unmarketable.

One of the current main concerns of office buildings investors is that the customers only hire for short-term, for low prices, and for a longer negotiation contract period, instead of queuing to deposit as previously. Moreover, there is no exception for reverse flows from grade-A office buildings to grade-B and grade-C ones, because of cheaper expenses and richer source of supply.

Le Dinh - Rol.vn

Searching Saigon for Boutique Comfort

2009-02-24T17:53:00.000-08:00

Justin Mott for The New York Times Downtown Ho Chi Minh City.

For more than 12 years now, I’ve been visiting Ho Chi Minh City, Vietnam, and I’ve watched as it’s grown bigger and richer, faster and hipper, more cosmopolitan and more connected. Saigon, as it’s still known to most, has an anything-can-happen energy that embraces me the moment I step off the plane, and I feel more at home here than perhaps anywhere else in the world.

And yet after all these years, I have yet to claim a local hotel as my favorite — a refuge to offer relief and comfort. I’ve stayed in numerous mini-hotels, the skinny, multistory accommodations favored by backpackers (generally $5 to $25 a night). I’ve stayed in the grand hotels that date back to the French colonial era — the Majestic and the Continental (from about $150). I’ve stayed in the ultramodern Sheraton tower ($225 and up for a deluxe room).

But none of these places have seduced me with that magical combination of décor, service, convenience, location, character and price to make me ever really want to return. Simply put, in my experience, Saigon had no exceptional, reasonably priced hotels.

Matt Gross A room at the Ordinary Hotel.

During my most recent visit last week — to see friends and attend a wedding — I was more hopeful. A friend had told me about the Ordinary Hotel (25 Dong Du Street, ordinaryvn@yahoo.com), right in the middle of Saigon’s central downtown District 1. “Very boutique, very funky,” she wrote in an e-mail message. And affordable too: around $50 a night for a deluxe room.

Booking proved a challenge. The hotel’s Web site and e-mail address didn’t work, and neither, for a while, did its phones. I had to ask another friend to actually go to the hotel and reserve a room. When I got there, however, the desk clerk had no record of it. Luckily, a fourth-floor room was available. Unluckily, an elevator wasn’t.

Matt Gross Furniture in the A room at the Ordinary Hotel.

The room itself had a sheen of cool: it was spacious, with antique wooden furniture and a wide white divan under a broad bank of windows. The walls were a neat mix of magenta and pea-soup green. Wi-Fi signals flowed freely into my laptop.

But the sheen soon faded. The desk chair kept breaking. The paint on the walls was peeling. The Wi-Fi signal was strong, but the Internet connection spotty. The divan was dingy. The shower-head mount collapsed the instant I turned on the water.

Where, I wondered as I checked out after two nights, are Saigon’s true boutique hotels? The city is full of French colonial villas and Art Deco houses ripe for transformation into properties of character and class. And while real estate is expensive, labor remains cheap — and that should translate into bargains for travelers.

“As an investment, it doesn’t work,” said Jean-Marc Merlin, chairman of the Apple Tree Group, a Vietnam-based company that owns and operates hotels all over Southeast Asia. “The annoyance factor of having to complete a project is too high. If you have to turn gray over two years, you’d rather do it over 200 rooms.”

Matt GrossA room at the A & Em.

In the meantime, there’s A & Em (848-3-822-7245; www.a-emhotels.com), a chain of five small, design-savvy hotels. I checked into the newest location, at 150 Le Thanh Ton Street in the Ben Nghe Ward District, after leaving the Ordinary. Slick and clean, this month-old A & Em branch featured tasteful, minimalist interiors — flower patterns were everywhere, from the pillowcases to the frosted-glass walls of the bathroom — and, more importantly, a reasonable level of comfort. The linens were soft, the mattress was real. The TV was a Samsung flat-screen, not some boxy knockoff. The bathtub was huge and deep, with whirlpool jets.

There were, of course, a couple of design misfires, like a toilet-paper holder wedged inaccessibly between tank and wall and no mount for the shower head. But I was willing to let those issues go, especially since the desk had given me $5 off the $50 deluxe-room rate — a sweet gesture. Even better, a shower-head mount miraculously appeared above the bathtub one morning, without my having said a thing — just the sort of attention to detail that makes boutique hotels an attractive option.

Still, one incident disturbed me, albeit briefly: One morning, on my way to breakfast, I took the stairs instead of the elevator. Halfway down, I was suddenly grabbed by an employee and bundled into the elevator, just so I wouldn’t have to step around a platter of food that was on the stairway landing. Annoyance flared, then subsided: Saigon may be changing, but it’s still Saigon: rough, intimate, improvised and surprising — all qualities that make the city my home away from home.
http://frugaltraveler.blogs.nytimes.com/2009/02/24/searching-saigon-for-boutique-comfort/?ref=travel

Real estate agents in Vietnam report first signs of recovery

2009-02-22T19:47:00.000-08:00

The property market in Vietnam is showing signs of recovery with an increasing number of transactions recorded in Ho Chi Min City.

According to real estate property brokers in the city, the number of property-related transactions has increased sharply.

Lam Van Chuc, director of the Phuc Duc Real Estate Company, said the number of people that bought properties in the last few weeks tripled as compared with the figures from the same time last year.

Also Luong Tri Thin, director of the Dat Xanh Real Estate Construction Service Company, said that the company has received about 200 people each day who asked for information on land plots.

'On average, we sell about 40 land plots in the My Phuoc area a day. The return of investors to the real estate sector is happening much sooner than we expected,' he said.

Property insiders attribute the positive signs to cuts in deposit rates and lending rates as well as property developers discounting.

'With the current interest rates, depositors do not receive attractive profits any longer, while the domestic securities market shows no signs of recovery. Therefore, many people are deciding to shift their savings to the real estate sector,' said Nguyen Vu Bao Hoang, director of the Thu Duc Housing Development Joint Stock Company.

However, property expert Nguyen Ngoc Duong, who is the chairman of the managing board of the Five Star Joint Stock Company, is urging property investors to be cautious before making any investment decisions in order to reduce risks.

'The market has become more lively thanks to the increasing number of people who become real estate agents to study market information. In reality, the number of successful transactions still stands at a modest level,' he said.

Le Hoang Chau, chairman of the HCM City Real Estate Association, agreed with Duong and said that it was too early to say whether the local real estate market has recovered. Many customers had not yet regained their confidence in the property market, he said.

http://www.propertywire.com

Real estate market report (Feb 6th, 2009 - Feb 12th, 2009) Property transactions return

2009-02-21T18:48:00.000-08:00

Many investors have begun to launch their products after a long frozen time for the property market. Purchasing power has slightly increased. This is an immediate effect resulting from the interest rate cut by banks.

ThuDuc Housing Development Joint Stock Company (ThuDuc House) is going to sell 262 apartments of the Truong Tho project at the minimum price of $1.000 per square meter. Similarly, the Sai Gon Thuong Tin Real Estate Joint Stock Company (Sacomreal) plans to sell 200 luxury apartments in the District 2. Several investors like Phu My Hung or Tan Binh Real Estate Company attracted many customers in order to sell apartments.

Concerning brokerage, the number of property-related transactions increased sharply after Tet holidays. Lam Van Chuc, director of the Phuc Duc Real Estate Company, said that the number of people that bought properties last week via the company tripled. Luong Tri Thin, director of the Dat Xanh Real Estate Service & Construction Corporation, also said that, during the last five days, the company received about 200 people each day who asked for information about land plots at the My Phuoc urban area, in southern Binh Duong Province.

“On average, we sell about 40 land plots in the My Phuoc 3 urban area per day," Thin said. "The return of investment of the real estate sector happens much sooner than expected.”

Some property agencies in streets such as Tran Nao (District 2), Hoang Dieu (District 4), or Le Van Luong (District 7) told that many customers came to ask information for buying houses.

In Hanoi, according to a DiaOcOnline’s survey, the customers also began to return to the property market, especially for projects which are going to be finished and handed over. The Ha Dong area is currently prospering. Land plots prices in the Ngo Thi Nham residential area (Ha Dong) this week were transacted at VND25 million – VND28 million per sq/m, much higher than the previous month (VND22 million per sq/m and without customer).

Giving explanations about this, Nguyen Vu Bao Hoang, director of ThuDuc House, said that this is the consequence of the fact that banks decreased the interest rates too low. Depositors do not receive attractive profits any longer, while the domestic securities market shows no signs of recovery. Therefore, many people decided to shift their savings to the real estate sector,” Hoang analyzed.

Tran Xuan Tung, an investor in the District 3, said that, with the current 7 percent deposit rate, he can earn a maximum VND21 million a year if he keeps VND300 million into a bank. According to him, this sum of money, even combined with more borrowing from his relatives, still can’t afford to buy a 70-square-meter apartment in this area.

However, according to Nguyen Ngoc Duong, chairman of the managing board of Viet Five Stars Joint Stock Company, the property investors should be cautious because we have to wait until the second quarter of this year to determine whether the market is really warm or not. Moreover, at that time, Construction Ministry’s plan to build 10.000 low-cost apartments, polices of tax delay, and interest rate decrease will be partly clearer.

Cheap houses are still on paper

Last week’s most prominent information was that the Ministry of Construction suggested again that the Government is considering the capital investment mechanism to build social housing for low-income earners.

Nguyen Tran Nam, deputy minister of the Construction Ministry, answered to DiaOcOnline that VND6.000 billion will be invested immediately and, from 2009 to 2010, there will have about 24.000 low-cost apartments for sale. On the next period of 2011-2015, about VND17.400 billion will be invested to build nearly 70.000 apartments. As a result, thousands of low-income earners will have the opportunity to buy cheap houses only within the next 6 years.

The Ministry of Construction also suggested a series of preferential policies for enterprises who participate in building social housing, such as exemption from land use charges, applying coefficient of land use higher compared to regulation, exemption from value-added tax, or tax from enterprises’ revenues. Nguyen Tran Nam, deputy minister, said that if all policies are simultaneously applied, each square meter will be only sold at the price of VND5 million – VND6 million. A 50-square-meter apartment will be sold at VND250 million – VND300 million.

However, in reality, implementing low-cost housing projects for workers and low-income earners is very slow. A pilot project of building 800 apartments for lease and for sale (funded by the State budget), being implemented from the middle of 2007 and expected to be completed in 2010, is facing delays : up to now, infrastructural design isn’t ready yet. Many continuous changes and proposals made the Ha Noi Department of Construction very confused.

Nguyen Hiep, chairman of Housing & Urban Development Corporation (HUD), said that many social housing projects have been slowly implemented because preferential policies for the enterprises who invest in them aren’t so attractive yet. The investors still have to pay land use charges and site clearance compensation equal to luxury housing projects, while selling prices of these houses are lower. Moreover, infrastructural weakness of low-priced apartment buildings is also an obstacle in attracting the residents living in these areas.

Dang Hung Vo, Associate Pro. Dr., deputy minister of Department of Natural Resources and Environment, told that if the Government spends a big sum of money to build houses for low-income earners, it would be an strong impetus for the property market. But Vo doesn’t approve that special treatments are only given to the investors. “There are indirect favors but not enough to solve housing problem for low-income people. It’s necessary to develop more specific policies to support people who have demand of buying houses,” Vo said. According to him, the low-priced housing market will be able to prosper only when people having housing demand will be supported by direct and effective financial policies.

Le Dinh - Rol.vn

Bank loans still beyond reach of real estate developers

2009-02-21T18:46:00.001-08:00

Many commercial banks have slashed lending interest rates to around 10% per annum, but real estate developers complain that they still can’t get bank loans.

Ta Van Trung, Director of Song Da 1.01 Joint stock Corporation, said that though interest rates have been cut, real estate developers still cannot get loans due to too many procedures.

“Banks ask too many questions, like about the expected date of project completion, about expected profit and clients,” Trung said.

“In general, banks prioritise funding projects in inner cities. But how many enterprises have land plots in inner cities to develop projects,” he asked.

Le Vu Dung, Director of Song Hong Land, which is implementing projects on improving apartment blocs, said that commercial banks always set overly high requirements for loans; therefore, he never ‘dreams’ of borrowing money from banks. Moreover, banks always ask real estate developers to prove the feasibility of projects by showing that the projects have buyers.

Meanwhile, according to Dung, this is absurd as investors cannot lure clients until projects are finished.

“We don’t expect much from the 4% interest rate subsidy programme,” he said.

He went on to say that real estate developers are whispering in each other’s ears that only projects on houses for low-income earners will have a chance to access funds from the interest rates subsidy programme. Meanwhile, Le Hung Manh, General Director of Gia Hoa Company Ltd, which plans to build houses for medium-level income earners this year, said that the company has not thought of borrowing money from banks for fear of complicated procedures.

Nguyen Duc Huong, Director of Lien Viet Bank, admitted that the bank prefers mortgaged assets with high liquidity, like savings books and valuable papers, while properties are considered as having low liquidity.

“Only projects in inner cities or ones in advantageous positions are prioritised, while we look at projects in suburban areas with critical eyes,” Huong said.

Meanwhile, Director of Dong Da Branch of Eximbank Dao Trong Thanh said that banks still have to be cautious with real estate projects. “Only highly feasible projects will get loans from banks,” Thanh said.

However, this “cautiousness” has been criticised by real estate developers, who say that the strict requirements have made the real estate market’s liquidity worse.

They say that in order to save the real estate market, the real estate market’s liquidity needs to be improved, which can only be obtained if banks loosen loan requirements.

Real estate developers have urged the State Bank of Vietnam to consider giving interest rate subsidies for real estate projects as well. They say that the real estate sector needs to receive “equal treatment” as the market can help create jobs, stimulate demand and make products for GDP.

However, experts say that real estate developers also need to try to rescue themselves.

Pham Sy Liem, Deputy Chairman of the Vietnam Construction Federation, said that developers need to accept lower profit in return for quick sales of products. Liem also said that investors should be more flexible in meeting the demands of clients.

“If you have a large house, but a client wants a smaller one, you should think of satisfying clients by turning the large house into two smaller ones,” he said.

Source: Vietnam Net

Another underground parking lot project suspended

2009-02-21T03:04:00.000-08:00

The Ho Chi Minh City People's Committee yesterday said it had informed the investor of a major underground parking lot at Bach Tung Diep Park in District 1 that it was withdrawing the project on concerns it would affect the city's underground planning.

The VND230-billion (US$13.2-million) project, for which Bach Tung Diep Services Joint-Stock Company had been chosen as the investor, is a five-story underground structure, three floors of which would accommodate 480 cars and 400 motorcycles, the remainder to be used for trading and service purposes.

So far, of the eight projects to build underground parking lots previously approved by the municipal People's Committee, only one - to build an underground parking lot at Le Van Tam Park - has completed legal documentation. Work on this project is set to begin this year.

Source: Thanhnien News

Malaysian property firm looks to Vietnam property market

2009-02-21T02:48:00.001-08:00

by News Desk

As domestic real estate markets have slowed, the big Asian real estate developers are looking abroad, within Asia, for new development opportunities.

Malaysian-based developer Sova Holdings Sdn. Bhd. recently announced their plans to enter the Vietnam market with their first development in Nhon Trach District in Dong Nai province in the South.

The developer has joined with local land owner Thai Duong Company (Sunco) and will break ground on the Nhon Trach City Center (NTCC) project in April this year.

The eight-hectare development is valued at approximately US$47 million, and will include modern offices, accommodation and entertainment services, targetting both local and expatriate residents.

According to the developer, NTCC will consist of four 13-storey apartment buildings, with villas, town houses a sports center and commercial services including two 15-storey office buildings which will be available for lease, as well as a four-star hotel. The project is expected to be operational 2012.

Vietcombank funds real estate project

2009-02-21T01:39:00.001-08:00

Vietcombank representatives signed an agreement in Hanoi on February 19, committing to the provision of US$44 million to fund the development of Indochina Plaza Hanoi, a mixed-used complex managed by Indochina Land.

The US$145 million project, which began last December, consists of two luxury residential towers, an office block and a retail podium.

Peter R. Ryder, CEO and Co-Chairman of Indochina Capital, Indochina Land’s parent company, said that the development of Indochina Plaza Hanoi, as well as a number of other Indochina Land projects across the country, reflects the sustained long-term commitment of the group to investing in Vietnam’s future.

Sharing that view, Vietcombank’s Chairman of the Board of Directors, Nguyen Hoa Binh, said that Indochina Plaza Hanoi was not only an excellent project in terms of economic values, it was in line with policies to intensify investment, prevent an economic recession and promote economic growth that the Government, the State Bank of Vietnam and Vietcombank were all pursuing.

“When completed, Indochina Plaza Hanoi will surely enrich the beauty and elegance of the capital,” he added.

Indochina Plaza Hanoi is the third large project jointly financed by Vietcombank and Indochina Capital, following the Nam Hai resort in Quang Nam and Indochina Riverside Towers in Da Nang. (VNA)

It’s time for real estate investments: foreign investors

2009-02-21T01:38:00.001-08:00

Foreign investors believe that this period, when the real estate market is gloomy, is proving to be the right time for investors to inject money into the market.

Mr Edward Minh Chi

Edward Minh Chi, Chairman of the Board of Directors of Minh Viet Investment Joint Stock Company, believes that Vietnam’s real estate market will warm up gradually by the end of this year, while difficulties will still exist in the second and third quarter. However, he thinks that it is now the right time for investors to learn about consumers’ tastes and make investments.

He does not agree with the opinions that say that investors should not invest in high-grade projects as the commodities are now in oversupply. Every segment of the market will have its suitable targeted clients, and high-grade projects will target high-income earners.

Besides, he believes that it is now the right time to kick-off investment, because it will take time to make products, and when the products are ready, the market will heat up.

Many investors, for example, have decided to inject money into penthouses, hoping that they will have products to sell in two years, when the market stabilizes. Their clients will be Vietnamese high-income earners, Viet Kieu and foreigners.

Ms Kim Winn

Kim Winn, General Director of Coldwell Banker Vietnam, the US leading real estate group, said that Vietnam proves to be the ideal place for foreign investors thanks to its advantages in comparison with other regional countries. Vietnam has a national economy with high growth rate and stable political situation, which make investors feel secure when they make investments.

“Vietnam has a population of 84 million, and 50% of the population is the youth. Vietnam is the market with great potential,” Winn said.

She believes that the real estate market will warm up by the end of 2009 or early 2010.

However, she has also pointed out the shortcomings of the Vietnam’s market, including the complicated management procedures. It takes long time to fulfill formalities for investment, with which investors need to become patient. Besides, the popularity of the cash transactions has also been cited as one of the problems.

Winn believes that if the problems can be settled, Vietnam’s real estate market will become more perfect, thus becoming more attractive to investors, both domestic and foreign.

Mr Marc Townsend

General Director of CBRE Marc Townsend, a real estate consultancy service provider, does not think that the stagnation of projects currently is the tragedy.

He said that the gloomy market forces investors to think carefully when choosing projects. the failure of some investors may be the opportunities of others. Whether the market is gloomy or not still depends on the ways of looking at the market of every investor.

Marc believes that the market will provide new supplies in the time to come. The time when clients have to queue to register to buy apartments is over, they now have the right to set their requirements and they have more choices.

The most important thing for investors now is to implement projects and offer products at the prices affordable to consumers. This depends on businesses’ capability.

VietNamNet/VNE

Vietnam: Adjusting to reality

2009-02-10T20:05:00.000-08:00

After an unprecedented period of growth, Vietnam’s real estate market came crashing back to reality in 2008. The market has adjusted, but is now the right time to invest?

Vietnam has received much attention in recent years, and until recently everyone was talking about its’ potential as a tourist destination, entry into the World Trade Organization, or the normalization of diplomatic ties with the United States. Analyzing the future potential of a country that seems to be following in China’s hallowed footsteps of rapid growth had become a pre-occupation of many market commentators.

Last year however, attention turned to the slumping stock market, falling residential prices, rampaging inflation and slowing growth forecasts. While many investors may have retreated, those with longer term objectives have maintained their commitment, albeit slower in the short term, with belief that the future is still bright for this frontier market.

For a country of 86 million people, the real estate market remains grossly undersupplied across all sectors, even with GDP growth forecasts cut back to 5.5 percent for this year, the majority of Vietnamese still believe they are in the midst of an exciting, growth economy.

Residential Market
After an unprecedented period of growth, Vietnam’s residential property market is finally returning to some semblance of reality, with pricing adjustments dictated by economically sound market forces and not rampant speculation. Lines of excited buyer’s queuing overnight to purchase condos off-plan are now a distant memory, with the family gold safely returned to the mattress.

Increasingly tighter fiscal policy during 2008, combined with the worsening global economic climate, is helping restore normality. The high-end luxury apartment market has fallen off considerably following the speculative switch from stocks to real estate, and is estimated to have dropped 40-50 percent since its pre-Tet 2008 (the Lunar New Year) peak. Not surprisingly, developers are also on the back foot having, in many cases, been carried away on the wave of speculative fervor, and are now delaying or pulling out of projects they perhaps would never have attempted in more stable market conditions.

With continuing and significant undersupply across most residential market segments, 2009 is likely to see momentum building once again and prices for completed properties edge consistently higher from their current, post-speculative levels.

Opportunity
Despite the global economic issues, the fundamentals that have attracted significant FDI remain strong. Vietnam’s young entrepreneurial population, undersupply across most real estate sectors, and improving legal infrastructure and government policies all bode well for continuing and long term economic growth.

Customer Understanding
Even though the real estate market remains undersupplied, new developments will require an additional level of customer understanding to ensure their success. This understanding of customer needs and how they relate to a particular project can be categorized through the following research objectives:

Identifying and sizing key segments and market opportunities through an analysis of the competitive set.
Profiling and prioritizing potential buyers through Demographic and Psychographic profilingof a project’s primary target market and key flanker markets.
Developing positioning and pricing strategies for each primary market and key flanker markets.

Any research study should enable developers to determine the potential sales/leasing opportunities and any constraints relating to the proposed development. This better assists the understanding of the profitability of different customer segments, and how better to invest resources to capture and retain the best of them. Knowledge of the needs and profitability of target customer segments is less susceptible to imitation than are the features and amenities of a particular property and will go a long way to effectively position and differentiate the end product. Robust marketing strategies also now needed to be well thought through and executed to achieve sales success.

Financing
With inflation under control, interest rates are now following the global trend in an effort to stimulate growth. For a country with less than 10 percent of the population using bank accounts and far less borrowing, the deleveraging of the West will be less prevalent in Vietnam. As base rates reach single digits a new generation of buyers should be emerge, unlocking the middle class aspiration to own a home.

However, though the fall in interest rates could stimulate bank lending in market sectors that were up until now ‘cash rich’, banks will likely remain cautious and will likely only lend on completed developments or, at the most, on developments that will be completed in the very near future.

Construction Costs
As the global slow down eases the pressure on commodity prices and construction costs in Vietnam have also eased. The global economy slowdown and market volatility are the key drivers for the decrease in construction costs this year, most commodity’s will see a price drop but certain commodities (Iron Ore, Copper and Coal) may increase due to manipulating supply.

The reductions in construction costs along side limited GDP growth will mean a slow down in projects. Contractors will be more competitive forcing suppliers to be more competitive when pricing material.

Outlook
The introduction of affordable mortgage financing, lower construction costs and a better understanding of customer needs across Vietnam’s residential market should present opportunities for economically sound developers.

The biggest question is now will pricing reduce further. It was an unprecedented year of turbulence for the Ho Chi Minh City residential market. Prices continued to accelerate sharply in early 2008 before plummeting after the Tet holiday. During the second half of the year prices continued to fall but at a steadier rate, down 15 percent, 39 percent and 30 percent from Q1 to Q4 for elite, prime and executive condominium, respectively. Cushman & Wakefield’s research indicates that few successful transactions have been completed in the elite resale market.

There is no certainty that prices will not fall further, but it is becoming clearer that 2009 will be a year to invest.

James Austen is associate director - project marketing for Consultants Cashman & Wakefield (Vietnam). www.cashmanwakefield.com.

Many real estate trading floors, few real estate commodities

2009-01-24T08:08:00.000-08:00

Though the real estate market remains cold, more and more real estate trading floors have been born recently, leading to the fact that markets lack commodities.

On January 10, 2009, the first real estate trading floor in the central region was set up, run by Cuong Hung Thinh Group.

Prior to that, on December 23, 2008, RESCO launched its real estate trading floor at No. 41 Suong Nguyet Anh Street in district 1, HCM City.

Many other real estate trading floors had been put into operation before, including the ones run by Asia Commercial Bank’s Real Estate Company (ACBR), Nam Long, Thu Duc Housing Development and Nam Viet.

New commodities for trading floors

Pham Van Hai, General Director of ACBR, said that besides land, apartments and houses in old urban areas, in 2009, ACBR will also seek business opportunities in project land.

Hai said that a lot of real estate project owners have come to discuss marketing to sell products at ACBR. The projects need to have transparent legal status, while the projects’ owners need to have prestige to be eligible to have their products transacted on ACBR.

Some real estate projects’ owners have their own real estate trading floors. However, the floors not only sell the products of the floors’ owners, but also other commodities as well.

Nguyen Xuan Chau, Chairman of Nova, a real estate trading company, also said that previously, his company mainly did the marketing for the company’s products. However, he has decided to ‘contact’ many other projects in order to diversify the commodities of the trading floor.

According to Truong Thai Son, Deputy General Director of Hoang Quan , Hoang Quan trading floor has joined forces with some other big floors nationwide in order to provide updated information to clients and diversify commodities.

Many trading floors, few commodities

A lot of real estate projects kicked off construction in the last weeks of 2008. However, the projects will only provide products as of 2010 or 2011. Meanwhile, the products being offered on floors mostly belong to old projects.

“Some projects’ investors have visited the floor, but they just sought to understand the conditions for marketing products, as the projects will only be kicked off in mid-2009,” Hai said.

Experts said that the market still lacks commodities. A lot of trading floors have been set up recently as the laws require real estate developers to have their products transacted on trading floors. However, as the market remains frozen, trading floors cannot find clients.

The network of real estate trading floors has gathered 115 members, but problems still exist. After one year of operation, the content of the websites have not been improved considerably.

Source: Vietnam Net

Vietnam: Serviced Apartments Survive Real-estate Market Collapse

2009-01-24T07:50:00.001-08:00

HO CHI MINH City, VIETNAM: The serviced apartments segment remains untouched by the property market's woes, with demand for rental apartments in major cities high despite the economic recession, Vietnam News Agency (VNA) reported.

A representative of Ascott International Management Vietnam said his company managed more than 800 luxury apartments in Hanoi and HCM City and most of them were occupied.

They were popular among foreigners who had been living and working in Vietnam for three to five years, he said.

Though the Government has allowed foreigners to buy houses with effect from 1 Jan, many of them are disinclined to do so, according to him.

They were used to living in places with good infrastructure and amenities, he explained, while most new houses came up in localities without those factors.

Those situated in developed areas were too expensive, he added.

Do Quan, vice chairman of the TSQ Vietnam Company, also said foreigners preferred to rent rather than buy apartments.

Few had a real need as well as the financial means to buy a house in Vietnam, he added.

Lam Van Chuc, chairman of the Phuc Duc property company, said most foreigners were not ready to pay their own cash to buy a house unlike Vietnamese.

Besides, they would only take out mortgages for houses if the interest rates were extremely low, he added.

Property consultant CBRE Vietnam said with the global economy at a low ebb, foreigners in Hanoi and HCM City would be happy to rent an apartment at 1,000-1,500 USD a month rather than sink US$200,000 into buying it. (Bernama)

Property trading floors mushroom

2008-12-20T21:59:00.001-08:00

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

2008-12-20T21:57:00.001-08:00

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

2008-12-12T20:00:00.001-08:00

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

2008-12-12T19:57:00.000-08:00

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

2008-12-02T20:19:00.000-08:00

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

2008-12-02T20:13:00.000-08:00

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

2008-12-01T18:04:00.000-08:00

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

2008-12-01T18:03:00.001-08:00

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.

Real estate market: who needs to be rescued?

2008-11-28T02:28:00.000-08:00

Real estate investors have been continuously crying for help recently as the prolonged frozen market has pushed them into the red. However, experts have pointed out that those who need to be rescued now are the low incomer earners who cannot afford accommodation rather than the real estate developers.Real estate developers have proposed a lot of measures to rescue them from incurring losses when the prices keep decreasing. They have urged banks to push up loaning and urged the state to set up assistance funds. They have also asked to use the idle capital of healthcare and social insurance funds to rescue the real estate market.

Is real estate market really freezing?

According to the HCM City Branch of the State Bank of Vietnam, the outstanding loans to the real estate sector by local banks have reached VND 61 trillion, accounting for 15% of the total outstanding loans in the locality.

By the end of October 2008, HCM City had still had 151 unfinished real estate projects. Banks have committed to loan VND 14.4 billion, and disbursed VND 9.3 billion, while VND 5.07 billion has not been disbursed yet.

The Governor of the State Bank of Vietnam, Nguyen Van Giau, affirmed that he has asked credit institutions to continue funding feasible real estate projects. This means that capital is still flowing into the real estate sector, and that the complaints by real estate developers, saying banks have turned their back on real estate projects, proves to be unreasonable.

In fact, a lot of real estate projects in HCM City have been implemented as previously scheduled, despite the material price increases at the moment, namely V-Star, Phu My, Phu My Thuan, Sky Garden, The Vista, or Sailing Tower.

Meanwhile, Nguyen Manh Ha, Head of the Housing Management Department under the Ministry of Construction, said that the prices have been falling only in the segment of luxury accommodations, while prices have not been falling in the segment of low cost houses (VND 10-15 million/sq m).

Secretary General of the HCM City Real Estate Association, Do Thi Loan, also said that the real estate market has never been frozen. It has just been witnessing a number of transactions fewer than in the fourth quarter of 2007.

No need to rescue real estate developers

Analysts have pointed out that real estate developers cried for help just to protect the benefit of real estate developers, investors, and speculators, while ignoring the benefit of the people.

Dr. Tran Du Lich, Head of the HCM City Economics Institute, said that those who should cry for help now are low income earners who cannot buy houses because of the skyrocketing prices, rather than the investors and speculators who pushed the prices up high at the end of 2007 and earned a lot of money from this.

In 2007, real estate firms reaped large sums of money from the real estate fever, and none of them said at that time that they wanted to put money into any funds. Now, when the prices have been dropping in value, they continuously urge to use the funds to save them from losses.

Doctor of Economics, Nguyen Quang Hung, said that Vietnam should learn the lesson from the US, where the money from pension and social funds was put into securities and real estate deals. He stressed that every fund serves its purposes, and that the money of the calamity prevention fund must not be used to rescue the real estate market.

Hung went on to say that instead of establishing the VND 10 trillion fund to help banks deal with bad real estate debts; it is advisable to use the sum of money to develop houses for low income earners.

At the international investment workshop held in HCM City in early November 2008, foreign economists also warned that if Vietnam just protects groups’ interests, much money will flow into the real estate market, which should be seen as a double-edged sword. They also said that Vietnam should let the ‘real estate bubble’ be filled out.

(Source: Tien phong)

The four problems of the real estate market

2008-11-28T02:26:00.000-08:00

The quietness of the real estate market is a reason for the slowdown in economic development. There are four problems in the real estate market, according to Tong Van Nga, Secretary General of the Vietnam Real Estate Association.

Do you think that the fall of the real estate market is the reason behind the economic development slowdown?

Yes, I do. If real estate investment and business develops well and steadily, this will lead to the development of the construction industry, construction material production (steel, cement, materials for interior decoration) and other industries, including woodworking, electricity, and electronics production. And of course, when the real estate market is quiet, relevant industries suffer.

What are the biggest problems of the real estate market now?

There are four problems. First, the number of real estate transactions carried out on licensed trading floors remains modest, while underground transactions remain popular.

Second, the structure of commodities in the real estate market proves to be unreasonable. The market lacks the apartments that fit the pockets of employees. Meanwhile, investors have injected too much money in building high-grade and luxury villas to serve high-income earners and speculators. Therefore, the real estate market suffered heavily when the bank interest rate increased considerably.

Third, there exist problems in the regulations on compensation for local residents for site clearance. The procedures for granting investment licenses and the procedures for granting red books and pink books, the certificates on house and land use right prove to be very complicated.

Fourth, banks are not really the ‘fellow-traveler’ of real estate developers and real estate buyers. There has not been any long-term fund for the real estate sector in particular, and industries in general.

Currently, real estate developers have been relying on short-term loans from banks, which banks mobilize from the public. That is why the real estate market suffers immediately when the interest rates fluctuate.

Some experts have said that the difficulties of domestic real estate developers are caused by a lack of capital, and this provides opportunity for foreign investors. What is your comment about that?

It is true that while Vietnamese enterprises are facing difficulties due to the lack of capital, foreign investors have jumped into Vietnam, especially the central areas in Hanoi and HCM City.

Foreign investment funds have been taking full advantages of this, offering cooperation with domestic investors or asking to buy back projects at low prices.

Commercial banks have resumed real estate credit, while having slashed lending interest rates. How will this affect the real estate market?

This is really a good sign, but it is not enough to recover the real estate market.

(Source: TBKTVN)

HCM City: abundance of golf courses, scarcity of public toilets

2008-11-28T02:22:00.001-08:00

HCM City “forgot” to design construction plans for car parks and public toilets, though it remembered golf courses. Some might say its memory was too good on that head, for concerns about land waste and environmental pollution are being voiced.

One district has three golf courses

Nguyen Minh Hoang, Chief of the Economics-Budget Division of the HCM City People’s Council, on Monday said a report about management of construction planning in HCM City had been finished. The report will be presented at the 14th session of the local People’s Council on December 2.

According to the HCM City People’s Council, HCM City has a plan to have 13 golf courses. Six have been licenced, namely Hoa-Viet in District 9, which is operational; Sing-Viet in Binh Chanh district and one in Cu Chi, which are in the site clearance phase; Saigon Tourist in District 9, in the phase of having a detailed plan drawn up and compensating for site clearance; Tan Son Nhat Airport golf course in Go Vap district, also in the detailed plan and site clearance phase; and a golf course of the Saigon Investment and Development JS Company in District 2, which has not been implemented yet.

There are two other golf courses which are awaiting agreement in principle: Quyen Thanh-Kumho in District 9 and yet another in Cu Chi district.

Five other golf course projects are being considered, one in Thu Duc district, one in Binh Chanh district, two in Nha Be district and one in Can Gio district.

Notably, District 9 alone has three golf courses which have been or will be constructed. Other districts like Binh Chanh, Nha Be and Cu Chi will also have two golf course projects each if the current projects go through.

According to the HCM City People’s Council, the plan to have 13 golf courses is inappropriate. This would result in land waste and serious pollution of underground water resources. The council suggested that HCM City authorities change the plan by turning golf course projects which have been licenced but not yet built or are in the phase of site clearance into parks, public woods, etc..

Construction plan lacks important works

The supervision report complied by the HCM City People’s Council also identifies some “irregularities” in HCM City’s construction plan. For example, the city has a plan on traffic development till 2020 approved by the Prime Minister but it doesn’t have a construction plan for bus parking lots.

In a recent meeting with officials from the HCM City Department of Planning and Architecture, Huynh Cong Hung, Vice Chief of the Economics-Budget Division under the HCM City People’s Council, commented: “It is funny that HCM City has tried to develop its bus system to encourage more people to use bus services, in order to curb the number of individual vehicles and solve traffic jams, but the city government didn’t remember that buses also need parking lots.”

Without a construction plan for parking lots for buses, these vehicles would have to park at coach stations such as the Mien Dong, Mien Tay, Cho Lon, District 8 coach stations or in parks like Phu Lam, 23/9 or on the street.

According to a resolution of the HCM City People’s Council, 2008 is the year for urban order and civilisation. Accordingly, people are supposed to be receiving heavy fines for urinating in public but the city doesn’t have enough public toilets.

The report also mentions other problems associated with HCM City’s construction plan, including a shortage of factories processing feces and mud from sewers, not enough places to park cars, as well as the absence of a plan to exploit and protect underground water resources.

Source: Vietnam Net

Concern over new standards for luxury apartments

2008-11-20T20:06:00.000-08:00

Looking for a high-class apartment in Viet Nam? Make sure it has a bidet, or it could be worth less than you think.

The construction ministry's circular No 14, officially circulated last June, outlined the criteria used to classify high-rise buildings. One of those for the two top classes is that apartments must have at least one bidet.

A sales official from the Phu My Hung Company, one of biggest real estate companies in Viet Nam, said the most luxurious 250sq.m flats in Phu My Hung residential area that cost billions of do rig would not make the classification. The apartments all lack bidets.

Nguyen Van Dat, General Director of Phat Dat Real Estate Development Joint Stock Co in HCM City, said he was ignoring this circular because his company's high-rise buildings had already been completed.

He said that a building's class was assessed based on its cost and other criteria, not whether the bathrooms all had bidets.

Truong Thanh Nhan, the general director of Van Phat Hung Company investing in the Phu My real estate project, expressed concern that while the company had advertised their building as top-class, they did not meet the circular standards. Most of their apartments are also missing bidets.

Deputy Construction Minister Nguyen Tran Nam argued that installing bidets in buildings was necessary to serve women.

According to the circular, there are four classes of high-rises in Viet Nam.

A first-class (luxury) building must meet top technology, architecture, infrastructure, equipment and service requirements. Apartments must be over 70sq.m, with a living room, bedroom, kitchen, dining room, toilet and other service rooms. Each must have at least two toilets, and the main bedroom should have a private toilet. Minimum hygiene equipment includes a sink, hygienic tub, bidet, shower and washtub.

Apartments in the next class down as regulated by the Ministry of Construction must be over 60sq.m and also be equipped with bidets.

Under the new criteria, no new projects in HCM City fall into either of these classes.

Unfeasible regulation

Other standards include having enough space for both car and motorbike parking for each apartment.

"The Phu My high-rise building has 500 flats which means that the building must have parking lots for around 750 cars," said Nhan, the general director of Van Phat Hung Company. "But we can't possibly get that much space for a parking garage."

Deputy minister Nam suggested that investors build underground garages or five or six-storey car parks.

Secretary General of HCM City Real Estate Association, Do Thi Loan said the ministry's Circular No 14 not only had unfeasible standards, it also contradicted with other regulations or circulars from the same ministry.

She noted that some flats were under 50sq.m but still cost several billions of dong. She said there was no reason why these flats would rank as third or fourth class.

An investor of a high-rise building located in the southern area of HCM City said he was concerned about his building's classification. He said it was impossible to rank the building as first or second class because most of the flats did not meet the ministry's regulations.

He noted that if the building was ranked as third class, it would lower its value.

Deputy chairman of HCM City's Construction Technology and Science Association, Phan Phung Sanh said that Viet Nam had not previously classified buildings. The initiative came after some buildings were advertised as luxury-class, sold at high prices and turned out to be dumps.

According to Sanh, classification should be based on detailed standards of equipment, services and the final product.

Officials of HCM City's new urban area's management board said Viet Nam needed to circulate standards on designing, constructing, checking and managing buildings.

HCM City University of Economics lecturer Nguyen Xuan Chau said that construction materials of first or second-ranking buildings should be clearly regulated.

According to deputy minister Nam, Viet Nam was still a new market, with limited personal standards, meaning that criteria to classify apartments were necessary.

"The circular is good for buyers because it raises the responsibility of investors," he said.

Source: Vietnam News

More steel than anyone can use

2008-11-20T20:02:00.000-08:00

The overheated growth of the nation's steel industry over the past lew years could soon result in massive oversupply when a number of steel "super projects" come online.

Industry watchers are issuing the warning even though domestic demand for steel has remained stable during the current global economic crisis.

Prior to the economic downturn, domestic and foreign investors piled into the industry, eager to take advantage of a building boom, and what seemed like an unlimited potential for growth.

In addition to Van Loi Steel Co. which has invested in three steel production plants with an annual output of 500,000 to a million tonnes each, the Viet Nam Steel Corporation now has an annual production capacity of about three million tonnes.

But, even major companies like Hoa Phat (furniture making), Vinashin (shipbuilding) and the Vinacomin Group (mining) have all stuck a toe into steel production, building a number of plants nationwide.

In the past two years, a number of major foreign-invested sleel production projects have registered. Six of these, with a total potential annual output of nearly 35 million tonnes, have been granted business licences and are under construction.

Another five-million-tonne steel project, a joint venture with India's Tata Group, is also queuing up for Government approval to break ground in Vung Ang in the central province of Ha Tinh.

If all of these projects are completed on schedule and run at designed capacity, it is estimated the industry will churn out a whopping 50 million tonnes of steel yearly.

Meanwhile, according to estimates from the Ministry of Industry and Trade's Strategic Research Institute, domestic demand for steel will be at roughly 20 million tonnes by 2020. The figure for 2025 was also estimated at only about 25 million tonnes under a master plan approved by Prime Minister last year.

With the anticipated demands, Viet Nam Steel Association chairman Pham Chi Cuong said just one or two of the major steel projects currently being developed would be enough to meet domestic demand.

Cuong said investors, both domestic and foreign, had vied to pour capital into the steel industry during a period of immoderate optimism. Viet Nam used to maintain a high growth rate of more than 8 percent per year, and investors were expecting the construction boom to continue apace.

Bearing them out, steel consumption last year surged by up to 40 percent over the previous year. But, then the real estate bubble burst.

Hidden costs

The Ministry of Industry and Trade has been willing to give the green light to so many steel projects in anticipation of tax revenues and new jobs for many locals, particularly in the country's more impoverished central region.

Experts now, however, are grumbling that the optimism about the benefits of the projects may be misplaced.

Besides the obvious negative impacts on the environment, the projects would also consume a large amount of energy, causing the country to depend even more on expensive imported energy sources, said Pham Chi Lan economic consultant to the Government.

Rampant domestic investment in the steel industry also puts projects at high risk of failure due to out-of-date technology and ineffectiveness. The Viet Nam Steel Association also issued a report warning that steel projects would not be able to operate sustainably were they to depend solely on domestic input materials, but dependence on imported materials could prove to be highly costly.

The report also noted that most domestic steel projects were small-sized, further limiting their potential effectiveness and competitiveness against larger, foreign-invested projects.
Source: Vietnam News

Foreign investors venturing to buy price-decreasing real estate

2008-11-14T01:13:00.000-08:00

While the real estate market has been falling with very few successful transactions, VinaCapital, a fund management company, is planning to raise US $400 million to inject in the market. Other foreign investors are also eyeing the price-decreasing real estate.

Construction workers now have less work to do as the real estate market is freezing

Representatives of VinaCapital have confirmed that it is planning to raise money for the investment in real estate. According to Saigon Tiep Thi newspaper, Reuters on November 4 quoted David Blackhall, Deputy Managing Director of VinaCapital as saying that the scale of the new fund would be some US $400 million.

Mr. Blackhall said that the US $400 million will target the real estate which is depreciating, especially the hotel and apartment projects.

“The real estate prices have dropped by 40-60% in Hanoi and HCM City. In such a condition, the half-finished projects, for many reasons, have become attractive in the eyes of investors,” said Tran Minh Hoang, Chairman of Vinaland, a real estate investment company.

Not only VinaCapital, the real estate investment fund under Prudential Insurance also told Reuters that it plans to inject some money in Vietnam in the next six months, which will also target the real estate going down in prices.

New business affairs in the real estate market have been reported. In early November, Aseana Properties completed the deal of purchasing 51% of stakes at High-tech Health Park in HCM City (US $27.6 million). This includes a privately run hospital, a compound trade centre, and houses with the total space area of over one million sq m. Prior to that, in July, Aseana spent US $18.03 million to buy stakes of Nam Long, a construction company.

Real estate now cheap enough to purchase

The favourite topic of the discussions of real estate developers these days is how VinaCapital can raise funds.

By November 3, according to LCF Rothschild, the net asset value (NAT) of the real estate funds in Vietnam had been as follows: Vietnam Property Holding -7.6%. JSM Indochina +7.6%, Aseana Properties -0.3%, and Vinaland +19.8%; an impressive figure.

Mr. Blackhall believes that the inexpensive transactions would purchase the investors to bet on the market.

The national economy has bettered than three months ago, and Mr. Blackhall believes that the real estate prices would only go down a little more before going up again, believing that the investors now have a good opportunity which they could not have had 12 months ago.

However, analysts still have doubts about the success of the fund raising as the domestic market is now in large difficulties.

“Only one or two successful transactions are reported every month,” said Tran Minh Hoang.

“Foreign investors now do not have much money as before, while foreign banks keep cautious with real estate credit. Meanwhile, the real estate in the US has depreciated much more than in Vietnam, making it more attractive to investment in the US than in Vietnam,” said the leader of an investment fund in Vietnam.

Accordign to LCF Rothschild, by November 3, the yield to maturity of the funds in Vietnam had been -64.5%.

Meanwhile, Chau Vinh Quang, Deputy Chairman of VinaGlobal, said that if someone has money at this moment, it is now the right time to purchase.

(Source: Saigon tiep thi)

VIETNAM'S CONSTRUCTION SECTOR URGES GOVT TO FUND LOW-INCOME

2008-11-14T01:09:00.000-08:00

HANOI - Construction and real estate experts in Vietnam have recommended the Government provide more flexible policies to encourage more investment in low and-mid-range housing.

Experts said now was a golden opportunity for the Government to encourage construction, as the supply of construction materials has been exceeding the building demand. Falling demand has led to low material prices, especially for steel.

Poor urban planning challenges development

2008-11-09T18:13:00.000-08:00

The Prime Minister declared November 8 the first Vietnam Urban Day to coincide with the long established World Urbanism Day. Urban Day aims to encourage people working in urban construction and development, including local authorities, planners, investors, experts and organizations. However, the current poor urban planning throughout the country is challenging the authorities and making trouble for residents.

Urban planning fails to meet development demand

Speaking at a ceremony to mark Vietnam Urban Day in Hanoi last Saturday, Construction Minister Nguyen Hong Quan said that besides the fast development of many new urban areas in the country, there are also shortcomings in urbanization caused by poor planning. Quan said the management capacity and ability of some local authorities do notmeet the requirements of urban progress. The lack of infrastructure impedes socio-economic development, and has been singled out as one of the causes of the inundation in Hanoi.

According to statistics, urban development and urbanization in Vietnam are not balanced, with under-developed areas accounting for 82% of the total new urban area.

Thoi bao Kinh te Saigon Online of Saigon Times Group also quotes Nguyen The Ba, head of the Vietnam Urban Development Planning Association, as saying that current urban planning does not reflect the special local features of regions, zones and climate or socio-economic development. Ba adds some zoning master plans develop too slow.

In 10 years, the number of urban areas in Vietnam has increased from 633 to 743. Experts forecast that by 2020, urban residents will account for 40-45% of the country's population.

Urban areas in Vietnam have seen a population influx. Statistics show that the number of rural workers spending 80% of their time in urban areas is increasing, particularly in large cities like Hanoi and HCMC. These transient residents have the potential to overload existing infrastructure, giving rise to urban slums.

In addition, the natural environment has not received adequate investment for recovery and upgrading, resulting in the loss of balance of natural resources in many places.

Planning infrastructure in most urban areas tends to be slower than socio-economic development. Investment in infrastructure is also slow, and capital investment mainly falls on the State budget and soft loans provided by international donors.

The general frameworkforurban development is in place in most urban areas, but large cities still face the lack ofbasic technical infrastructure such as water supply, electricity, drainage and sewage, and telecommunications.

Many challenges for urban development

The shortage of management experience, passive policies and inefficient strategies in the face of rapid urbanization and a booming population all challenge urban development.

At an urban planning conference in Hanoi last Friday, foreign and local experts stressed that population imbalance, economic growth, and overloading of the existing urban infrastructure are the main problems.

While urban planning has a key role to play in economic development, Construction Deputy Minister Nguyen Van Don admitted that planning remains weak and that each urban area must overcome by setting up a long-term strategy.

The legal framework will need improvement. The Law on Construction and the Law on Housing have been around, but the Law on Urban Planning only put out for discussion at the National Assembly last Saturday.

Some experts said the shortcomings of urban planning have existed for a long time because the private sector has not been more active in building and upgrading civil infrastructure.

Another challenge for urban development is the urban population has increased creating the risk of imbalance between economic development and welfare of the people in large cities.

While the population in urban areas of Vietnam was only 19 million in 2000, 22 million in 2002, it is now expected to reach 30 million by 2010 and to hit 46 million by 2020. The increasing migration from rural to urban areas has forced the authorities to look for flexible, long-term plans.

Source: Saigon Times

The real estate market report (Oct 24th – Oct 30th) "Open door" with the real estate credit - A way to reduce risks for banks

2008-11-03T00:44:00.000-08:00

Last week’s most mentioned information is that property price continues to fall but buyers haven’t been interested much. Even financial experts also say that it will be reasonable if the property price reduces further.

Property price continues to drop

A recent survey of Hanoi’s housing market in 3rd quarter, 2008 has shown that although prices of all current apartments are low at 7-10% compared with the peak level achieved in 1st quarter, 2008 and much lower compared to the time of 4th quarter, 2007, the number of successful transactions is not much. For the implemented projects with slow progress such as Nam An Khanh, Duong Noi, many investors have accepted lower selling price compared to the original price to cut losses due to suffering from banks’ interest rate. The main reason of price decrease without transaction is that people having real housing demand for living or businesses have financial difficulties because of not being received support from banks.

Besides, according to the assessment of realty experts, apartment price fluctuating from 732 to over 2.500 USD per sq.m (depending on each grade) in the market currently is still too high for people’s earnings. Furthermore, after many times of price decrease, the buyers are still waiting for the next price drop in coming time.

In HCM City, the prices of foundation land lots and apartments fall significantly (but in some prime locations, price is still high). Because there are many projects, property prices in HCM City drop much more than in Hanoi. In some places, the falling rate is up to 60%. An another reason for this is sharp price fall of construction material.

In response to the press, MA. Vu Dinh Anh, Deputy Head of the Market and Price Research Institute under the Ministry of Finance says “The present market has no transaction is due to the fact that prices of property types ranging from lot, foundation, houses, offices for lease, apartments, act are still high, even too high. The thing that businesses need to do now is reducing the price to stimulate the buyers and “to activate” the market. “The prices of offices and high-rise apartments will have to drop further”, Vu Dinh Anh affirms. As to him, apartment buildings without any transaction is because many current homebuyers don’t really need the accommodation, but because they have much money, they want to buy houses to save their money or to re-sell. Only the price falls down by more 10-12%, real demand will arise.

Mr. Vu Dinh Anh analyzes that at present, the market is struggling between the businesses decreasing prices to sell goods, to restore the capital, to compensate costs and falling into the impasse to bankrupt if not cutting the prices. “Cutting the prices can make profit lessen, even suffer losses. Evidently, referring to price cutting, the businesses will not appreciate, the financial institutions will not either,” Mr. Anh says.

However, according to Mr. Anh, to save the realty market, the government must propose methodical and systematical solutions in the direction of creating many channels with different investment capitals. And it’s necessary to have comprehensive and consistent guidance in legal document, not leaving the businesses to self-manage.

Necessary to actively deal with the real estate credit

The State Bank of Vietnam has told that there is now VND115 trillion in direct real estate loans from banking system. This amount is very huge if including nearly VND500 trillion of mortgage assets in property in Vietnam. Le Xuan Nghia, Director of Department of Banking Development Strategy under the State Bank of Vietnam says that the level of non-performing loans (NPLs) in total outstanding loans is about 2,7%.

Because of the “frozen” realty market and “weak” transactions, from now to the year-end, it is predicted that NPLs in this field increase by 4% in total outstanding loans. The level of NPLs is nearly double compared to the one of 2007 and the year 2009 is projected to not be much better.

The situation of overdue debts in the real estate credit shows a increasing sign, some real estate businesses appear signs of losing the ability to pay debts. “If the realty market has no liquidity by December 31st, 2008, all current real estate debts will become default. Although all debts have mortgage assets, the banks cannot also liquidate them at the same time or find VND115 trillion to buy such properties. Moreover, liquidation procedures are too complicated”, a financial experts forecasts.

According to Mr. Le Xuan Nghia, the strategic target put forward by the State Bank of Vietnam from now to 2010, NPL below 5% is acceptable. Therefore, the rate 4% is still in the proposed strategy. On the other hand, in past time, the lending in the realty field is strictly controlled by banks from appraising to lending rate. As a result, secondary risks for the real estate lending is not big. However, Mr. Nghia has said that although the real estate NPLs are not big compared to the total outstanding loans, it’s dangerous that they mainly concentrated on some small, weak commercial banks with high real estate outstanding loans. This makes these banks face serious capital decline, stand in front of high risks, not have enough backup fund to solve NPLs, and then heavily causes difficulties on its liquidity as well as financial effects in their business activities.

A team of specialists of National Center for Socio-Economic Information & Forecast have judged that the current risk is that the banks turn their backs on the realty loans, causing the market not to defreeze, payment of mortgage loans to encounter difficulties. Even for another mortgage assets, the banks find uneasy to liquidate to withdraw the capital promptly.

Basing on the instantly payable capital excess of credit institutions of VND50 trillion (announced by the State Bank of Vietnam on October 24th), overnight rate of VND offered on inter-bank market falls sharply, from 13% down to 10,33% per year. Mr. Le Xuan Nghia has told that the banks can “open door” with the realty market on the basis of risk interest rate re-structure to have different interest rates for each lender. The well-assessed projects only finished 80-90% due to the capital shortage, so the banks should restructure their debts to help these projects to be completed as scheduled.

As a result, the real estate businesses will earn the money because of having products for sale and the banks will withdraw their loans. For the field of consumer lending, Mr. Nghia said that people having real demands can lend 50% of property value, with reasonable interest rate, contributing to create the liquidity for the market.

The experts also suggest that the government should pay attention to establish backup fund to cope with commercial banks having realty lending difficulties.

“For the financial market, just a slow step, costs of risk resistance can cost tenfold. Don’t think that the mortgages are safe without action. We must actively put the problems and resolve them by many different ways”, Mr. Nghia says.

Le Dinh

Local real estate cheap for foreigners

2008-11-03T00:42:00.001-08:00

Laws are lenient for them to buy and sell property

DESPITE the current global financial meltdown, the Malaysian property market still remains attractive to foreign investors, according to International Real Estate Federation (FIABCI) Malaysia honorary treasurer Yeow Thit Sang.

“The local property market is still attractive in terms of prices. Properties in Malaysia are among the cheapest in the region,” he told StarBiz.

“Our laws are also comparatively more lenient for foreigners to buy and sell property in Malaysia,” he added.

Yeow said foreigners wanting to purchase property in countries such as Indonesia, the Philippines, Thailand and Vietnam were generally put off by the countries’ respective laws.

Another plus point for foreigners who bought property in Malaysia is that they are not subjected to death taxes, Yeow said.

“Japan has a death tax of 70%. Even in England death duties are stringent. That is why all the Lords are becoming paupers!”

Yeow said FIABCI-Malaysia would be sending a representative to Japan in December to create more awareness about the local property market and to encourage more foreign direct investment (FDI) into Malaysia.

He also said the local political development was not creating uncertainty and was not deterring foreign investors from Malaysia.

“The political scene in Malaysia is a normal democratic process. It is a sign of political maturity rather than uncertainty. It is not causing chaos like some countries,” Yeow said.

On another issue, when asked if the local property market was in a slump, Yeow said: “Our property market has not hit a slump. It is more of a slowdown.”

He attributed the slowdown to rising raw material prices that was sparked by the fuel price hike in June.

“Problems occur when construction cost goes up midway through a project and it is uncertain if it is the developer, contractor or consumer that will bear the cost,” Yeow said.

He said many contractors were increasingly reluctant to take on projects without a variation clause spelt out in the contract.

“Both contractors and developers should insist on a variation clause in their contracts to safeguard their interests.

“Should construction costs go up midway through the project, they can immediately determine who bears the cost and not have projects hanging,” Yeow said.

Going forward, he said he did not foresee see a slump in the local property market.

“There can never be a slump so long as there is demand. There is a lot of migration from rural to urban areas.

“The population is growing steadily and there will always be a need to house people,” he said.

“From an investment point of view, buying property is also a good safeguard against inflation,” Yeow added.

Yeow believes a high level of unemployment in the country could cause the local property sector to tumble.

“If unemployment were to rise, people will not be able to pay their loans and that will cause a slump. When that happens, banks will also take back the property,” he said, adding that the unemployment rate in Malaysia was low now.

“We still need to bring in foreign workers,” Yeow said.

On another note, Yeow said the standard of property development in Malaysia had improved tremendously over the years and it was being benchmarked against international standards.

“Our developments are definitely on par with those of other countries. Many of our projects have won international awards such as FIABCI International Prix d’Excellence,” he said.

The International Prix d’Excellence is an annual competition that honours the world’s best property projects.

On the local front, developers are recognised for their development projects and are honoured at the annual Malaysia Property Award.

Winners of the Malaysia Property Award in their relevant categories will go on to represent Malaysia the following year at the International Prix d’Excellence.

FIABCI Malaysia will be organising its 16th Malaysia Property Award on Nov 12 at the One World Hotel in Petaling Jaya, with Malayan Banking Bhd as the official sponsor.

The categories that will be contested are: Property Man of the Year, Master Plan, Residential Development (low rise and high rise), Retail Development, Industrial Development, Specialised Project (two categories), Office Development, Hotel Development and Resort Development.

The Yang di-Pertuan Agong and Raja Permaisuri Agong will be the guests of honour at the prestigious event.

By EUGENE MAHALINGAM

Debt may reach VND 30 trillion in 2008

2008-10-29T00:48:00.000-07:00

VietNamNet Bridge – The debt of local credit institutions may reach VND 30 trillion (US $1.9 billion) this year, according to Le Xuan Nghia, Director of the Banking Development Strategy Department under the State Bank of Vietnam (SBV).

Nghia released the figure at a workshop held on October 28, discussing the global financial crisis and actions of Vietnam’s banks and enterprises.

He said that a large proportion of the debts come from real estate credit, while the remaining volume comes from business loans.

The forecast VND 30 trillion in debts was released after the consideration of reports made by credit institutions. The figure had reached VND 22 trillion (US $1.4 billion) by the end of September 2008.

The figures released by the SBV at the end of July about the percentage of businesses paying debts on schedule show that: 23% of businesses have been profitable, 73.2% of businesses have been operating at the average level, and 3.8% of businesses have been facing difficulties, of which 1.42% of businesses may lose capital.

The period between the end of 2007 and the beginning of 2008 witnessed a booming of the real estate market, with a large sum of capital that was flown into the sector at that time. As prices in real estate have decreased by 30-40% and the real estate market has become frozen, enterprises cannot recover money from investment projects to pay the banks.

Nghia said that the settlement of the debts is still possible, provided that the two sides, businesses and banks, cooperate closely with each other to find the right solutions.

Nghia said that the biggest problem now is that businesses and banks still cannot sit together to exchange information.

What is noteworthy is that debts gather in some banks only. Therefore, if no proper solution can be found, some banks will fall into large difficulties by the end of the year.

PM directive gives boost to real estate

2008-10-27T02:15:00.001-07:00

HCM CITY — Prime Minister Nguyen Tan Dung has changed the name of the leading national housing agency to the National Steering Committee for Housing Policies and Real Estate Market.

A prime ministerial decision issued last week gives the committee additional functions, duties and powers, including the implementation of the Law on Real Estate Business and the establishment of policies to develop this sector.

Two deputy ministers from the ministries of Agriculture and Rural Development and Home Affairs and the vice-chairmen of the Ha Noi and HCM City People’s Committees have been appointed to the committee.

The governmental relevant agencies are developing a proposal for real estate development to provide orientation for the market which is expected to be finalised in January next year.

The Prime Minister has ordered the State Bank to ask banks to review each project, and continue lending to unfinished real estate projects in order to hasten their completion.

Currently, like many other sectors, the real estate market is facing many difficulties. If this situation prolongs, the market will fall into a situation where there is not enough supply, which is also a risk for the market, say industry insiders.

More importantly, the market is now attracting a very large amount of capital.

More than 50 per cent of the total US$57 billion in foreign direct investment that flowed into the country in the first nine months of the year was in the industry and construction sectors.

These projects, when implemented in the coming time, will mobilise many billion dollars more, accompanied by changes in land, society and urbanisation, they add.

Around 1,500 housing projects and urban areas are being built across the country. Viet Nam is striving to build 35 million sq.m of housing each year to achieve a per capita space of 20sq.m in urban areas by 2020.

The Prime Minister said that in the next few years, real estate market would be the driving force for growth of the economy.

Developing the real estate market should also aim at solving housing problems especially for low-income people, he said.

Dung noted that real estate development would promote the development of other economic sectors such as building materials, cement, steel, industrial electrical equipment and wood processing; and creates job for many workers.

Therefore, it was an important task to ensure that it develops in the right direction, he said. — VNS

Ray of sunshine to thaw market

2008-10-26T21:07:00.000-07:00

Jones Lang LaSalle Vietnam, a real estate consulting company, predicts that the Vietnamese real estate market will be subdued until 2010.

The ongoing credit crunch has left many developers in a tight spot.

Getting inflation under control is seen as a major step to getting the property market’s house in order. “We are expecting a period of pricing stabilisation over the balance of this year and into the first half of 2009,” said Andrew Brown, country head of Jones Lang LaSalle (JLL) Vietnam.
Brown predicted that until the inflation rate was brought under control and started to track back towards single digit again, there would not see any significant improvement in pricing, sentiment and activity levels which was not likely until the latter part of 2009 or 2010. However, in the last quarter Brown had seen some positive moderation in inflation which now appeared to have peaked.

“The current credit crunch being experienced in Vietnam as it is elsewhere in Asia and many markets globally means inaccessible and expensive loans and discourages market entry. As a result we believe residential prices will continue to be subdued for the rest of 2008 and into 2009,” he said. Unless interest rates drop to more affordable levels demand will not return to a level sufficient to influence home prices.

According to JLL, there were signs of positive responses to the government’s recent stabilising measures as the consumer price index has increased at a much slower pace and rose only 0.7 per cent for September. “The State Bank’s decision to increase the interest payable on banks’ compulsory reserves from 3.6 per cent to 5 per cent in September 2008, is yet another positive signal of a softening in the State Bank’s stance on the credit crunch by increasing banks’ liquidity indirectly, albeit in a limited and measured way,” Brown said.

“The government is committed to stabilising the economy and if inflation achieves a significant correction, we believe there is scope for interest rates to soften throughout 2009. This will provide impetus to the current sluggish sentiments, and a gradual return of optimism to the housing market, including the supply side,” he added.
The real estate market across Vietnam has been a generally tough and challenging environment for most domestic and foreign players over 2008.

Though market fundamentals remain healthy with limited supply and robust demand across most sectors, the macroeconomic situation has subdued activity levels and sentiment. High inflation is largely to blame with rising construction costs and costs of debt resulting in the “go slow” or stalling of many projects.

According to JLL’s overview, new entrant real estate investors in 2008 have been much fewer when compared to 2006 and 2007. However, those already committed investors have remained active with many looking at further opportunities to invest. These committed investors remain optimistic on the compelling medium to long-term outlook for Vietnam.

Most investor interest is likely to remain in Ho Chi Minh City and Hanoi and their surrounding provinces, with limited interest currently for coastal opportunities and second tier cities where higher risk is perceived especially around aspects of occupier demand drivers.

The residential sector, JLL commented, has been most affected with pricing as well as particularly turnover levels having dropped dramatically compared to the second half of 2007. “The speculation that was rife through this period has been halted by the events and cooling down of the market over 2008 and this is a positive outcome as speculation is not good for anyone,” it said.

JLL expects a further correction which was witnessed over 2008, something many emerging markets encounter and is necessary to help stabilise the market and avoid more dramatic falls. Many local developers are struggling, especially those that relied heavily on pre-sale and bank loans to finance their developments. As a result, these developers are facing difficulties in carrying out projects.

“This situation paves the way for foreign investors to enter talks with local partners who have been resistant to their approach before, and this puts them in a strong position in joint-venture negotiations,” Brown cited.

Stability for Vietnam’s real estate market is interrelated to the macroeconomic environment particularly if inflation and the trade deficit do not worsen further then the market should not see any significant downward pricing adjustment. Recent indicators are promising in this regard with a positive outlook on food and fuel pricing which should help reduce inflation whilst the governments import restrictions will help moderate the trade deficit situation.

“Furthermore we are not forecasting over the short to medium term any market or sector within Ho Chi Minh City or Hanoi having a risk of over supply and in all likelihood demand will continue to outstrip available supply through the balance of 2008 and 2009. Therefore we can reasonably expect this will contribute to maintaining existing pricing levels,” Brown concluded.

(Source: VIR)

Investors consider HCM City metro

2008-10-25T01:00:00.000-07:00

Investors expressed interest in proposed metro projects in HCM City at a seminar on urban underground systems held in the city on Wednesday.

Among the projects that caught their attention were those passing beneath major intersections facing chronic traffic jams like Nam Ky Khoi Nghia-Ly Chinh Thang, Dien Bien Phu-Hai Ba Trung, Nguyen Thi Minh Khai-Cach Mang Thang 8, and Dan Chu Square.

According to the Department of Transport, there are some 1,200 intersections, including 320 major ones, in the city.

HCM City's zoning plans envisage building four metro lines linking Ben Thanh Market with Tan Son Nhat, An Lac, Thu Thiem, and Sai Gon South.

The seminar, titled "International Lessons from International and Viet Nam Urban Underground Works "held by the Association of Vietnamese Constructors and the city Construction Department, was an indication that Viet Nam is now ready for underground systems.

Underground parking spaces too are urgently required in HCM City because of the premium on space. The city has 370,000 automobiles and gets some 40,000 vehicles of all varieties from other provinces every day.

To accommodate them, authorities plan to build eight parking lots under Lam Son Square, Chi Lang Park, Le Van Tam Park, Bach Tung Diep Park, Hoa Lu Stadium, Tao Dan Football Stadium, Nguyen Hue Street, and Nguyen Du Street.

Le Khac Hiep, chairman of the Vincom joint stock property company, said the urban underground space would include not only infrastructure (transmission and pipeline systems, metro lines, parking lots, and tunnels for automobiles) but also business complexes, public spaces, and entertainment and other facilities.

The Thu Thiem Tunnel under the Sai Gon River is currently the only underground work being undertaken in HCM City. But its implementation is facing difficulties due to geological issues.

A feasibility study is being conducted for the first metro route.

But the general director of Apave Viet Nam & Southeast Asia, Nguyen Cong Phu, said so far Viet Nam has no "true" underground work.

The city has been soliciting investment in the eight underground parking lots since 2004, but none of them has made progress.

The project to build one under Lam Son Square has been pursued by a local investor for several years. But the city authorities have not given the nod for it, saying they are unsure about the risk to surrounding structures. They are set to refund the money the investor spent on the feasibility study.

But this lack of underground construction means the city's zoning plan does not contain data about facilities existing underground, such as pipelines, resulting in delays to proposed projects.

It also means there has never been a need to do extensive geological studies beneath the city, and the city administration cannot give the go-ahead for metro or other underground projects.

At the seminar, researchers and experts on underground works from France, China, Malaysia, and Singapore spoke about their experiences in building metro lines, stations, parking lots, and pedestrian crossings. Existing zoning plans for underground works in HCM City should be restructured so that they could be used in the future, they said. But poor archival services mean documents on the design and construction of many underground works are no longer available.

Source: Viet Nam News

Property remains unaffordable

2008-10-25T00:59:00.001-07:00

Property prices in some major cities have declined nearly 60 per cent compared with figures posted at the end of last year, but experts say prices are still too high for many people to afford.

According to property management firm CBRE Viet Nam, as much as 80 per cent of the country's population can't afford to buy property.

It's been even more difficult to buy houses this year as banks have limited mortgages on fears of a 'bubble' property market, and the State Bank of Viet Nam is now restricting commercial banks' credit growth rates at 30 per cent.

According to Ministry of Construction data, the prices of land and apartments next to Van Khe and Van Phu urban areas, parts of the newly expanded Ha Noi, now range between VND10 million and VND20 million (US$600-1,200) per square metre.

As of August 1, Ha Noi officially tripled in area to about 3,350sq.km, taking in Ha Tay Province, Vinh Phuc's Me Linh District and some parts of Hoa Binh Province.

In original parts of the city, the price of a 60-70sq.m apartment ranges from VND700 million to VND 1.2 billion ($42,400-72,700).

The ministry calculated that if a couple can save VND5 million ($300) a month, it will lake them up to 16 years to afford a VND1 billion ($60.600)' apartment.

Nguyen Khanh Toan, a Ministry of Construction official, said the country's accelerated urbanisation rate and the Government's open policies such as allowing overseas Vietnamese and foreigners to buy dwellings in Viet Nam, were boosting demand for housing in the domestic market.

Experts say that while high property prices don't match average income levels, limited supply is pushing prices up.

Nguyen Trung Vu, director of Century property firm, said it was necessary to increase supply to meet market demands.

"Increasing supply means we need to develop large projects," Vu said, adding that strong infrastructure and facilities including schools, hospitals, parks, trade centres and offices were needed. Hoang Quan Real Estate Company Director Truong Thai Son said that the development of the property market needed support from the monetary market.

"Now that banks are limiting mortgages, enterprises and people are finding it difficult to find credit." he said. "This brings down the market, which causes a short-term supply shortage."

Pham Sy Liem, vice president of the Viet Nam Federation of Construction, said the property market was one of the backbone markets of the economy, contributing greatly to gross domestic product (GDP). He said its development would stimulate the development of other areas such as construction and building materials.

"If the real estate market freezes, it will generate a large amount of stagnant capital, which negatively affects the monetary market as well as the economy," said Liem. "Thus the problem requires Government regulation."

The Ministry of Construction said it was compiling a plan to develop the property market, which should be submitted to the Politburo for consideration in the first quarter of next year.

The plan was expected to help the market develop healthily and balance macro-level indexes, the ministry said.

The country's total housing reserve is now around 926 million sq.m, and is forecast to hit 1.27 billion sq.m in 2010, according to Ministry of Construction official Pham Khanh Toan. Urban housing growth rates average around 15 per cent per year.

Per capita housing spaces are now around 10.7sq.m and expected to reach 14.5sq.m in 2010.

Vietnam's Real Estate Remains Attractive to Retail Investors

2008-10-24T21:00:00.000-07:00

HANOI, Oct 24 Asia Pulse - The real estate market for retail services in Vietnam remains appealing to both local and foreign investors even though the global economy is experiencing fluctuations, said a representative from the property consulting and management firm CB Richard Ellis Vietnam.

CBRE Vietnam's Associate Director for Market Research Renato Shordon made the remarks at a press briefing in Hanoi on October 23 to announce the Hanoi Property Market Update.

Trade centres and retail spaces across Vietnam have indicated signs of recovery much quicker than was expected even though consumers have cut their spending due to high inflation rates, Shordon stressed.

He cited market research company Nielsen's global consumer confidence survey, saying that Vietnamese, who ranked ninth in the list, is among the most optimistic consumer group.

According to the CBRE Vietnam executive, an insufficient supply of space for trade centres and high rent levels at downtown shopping plazas are considered to be other factors behind the attraction of an increasing number of investors to this market.

Shordon revealed that 13 Hanoi-based shopping centres currently offer a combined total of 100,000 sq.m, with an occupancy rate of 90 per cent and rents costing up to US$130 per sq.m per month at the heart of the city.

Real-Estate-For-Tourism market sees new investment opportunities

2008-10-22T18:52:00.000-07:00

Foreign investments in the Real Estate for Tourism Development market have been flowing into Vietnam, according to the Ministry of Planning and Investment (MPI).

The central region, which has been famous for beautiful beaches

According to the MPI, 18 out of 487 projects that were licensed during the first six months of this year were tourism-hotel projects, and capitalized at nearly $4bil. Five out of the eight biggest projects announced by the ministry were projects that fell into the field of real estate for tourism.

Experts believe that the number of projects in the tourism-hotel field will further increase during the last months of this year, and continue to grow for the next 2-3 years.

The experts have every reason to believe this as the number of foreign tourists to Vietnam is expected to increase over the next few years with Vietnam being considered as a new attractive destination.

In 2007, Vietnam received 4.2mil foreign tourists and served 20mil domestic tourists. The Vietnam National Administration of Tourism (VNAT) has forecasted that there would be 6mil foreign tourists to Vietnam by 2010 that would stay for an average of 4.6 days.

As such, Vietnam needs more high-grade accommodations to meet this increasingly high number of tourists. Currently, Vietnam is seriously lacking high-grade hotels. The 5-star Daewoo always sees room occupancy reaching 85-90%, while Melia sees 95% during the high season. The ratio of net profit on the total turnover at luxury hotels in Vietnam is relatively high, at 20-35%, with which Vietnam is described as being an attractive cake for investors.

Experts said that in terms of material facilities and infrastructure, Vietnam nowadays still lags behind where Bali was 28 years ago. Therefore, it is expected that the accommodations in Vietnam will increase rapidly from 9,000 hotels in 2007 to 13,500 in 2010.

On October 2, the project on Vinpearl Hoi An sea ecotourism in the Cua Dai sea area was kicked off. Vinpearl Hoi An Resort will comprise of a 5-star hotel and 35 luxury villas, covering an area of 70,277 sq m. The VND300bil project is expected to be put into operation in the first quarter of 2010.

(Source: VnMedia)