Real estate market to enjoy a boom in 2008

For the last month, a lot of investors have been flocking from HCM City to Binh Duong province to hunt for land. Just within one month, the land price in Chanh Nghia urban area in Thu Dau Mot town has increased by ten folds, now trading at VND26mil/sq m. Meanwhile, land owners in Thuan An district do not sell land at this moment for fear that they would take losses if the land price increases further.

Nguyen Khanh Hung, Deputy Director of Dat Xanh Real Estate Company, said that the land in Binh Duong province has become more expensive since the beginning of the year, but the price has been skyrocketing for the last few days as a lot of investors are seeking to buy land here.

The land plots in Long An province have also been attracting investors though the land price is double now compared to one month ago. The prices of the land plots in the areas contiguous to HCM City, especially in the areas linking with Nguyen Van Linh Road in district 7 of HCM City, have soared to VND7mil/sq m. Meanwhile, in Dong Nai province, the land plots on the roads linking to Long Thanh airports are being most hunted by investors.

Analysts said that investors now tend to make investments in neighbouring provinces instead of HCM City. Director of a real estate company in district 3, HCM City said that the transport is not the big problem for investors any more because the transport system has been well developed. Meanwhile, the land prices in the provinces are considered affordable for many investors, while the land price in HCM City is quite exorbitant.

Marc Townsend, Managing Director of CBRE Vietnam, said that the HCM City real estate market would see a boom in 2008. The apartment prices would increase by 20% on average, though a lot of apartments will be marketed, including the ones under the projects of Saigon Pearl, Phu My Hung, The Everich, Cantavil, and River Garden.

Why will the apartment prices still escalate despite the profuse supply? Mr Townsend said that it is because investors will count on the inflation rate into the apartment selling prices.

Under the current regulations, investors cannot mobilize capital from the public until they finish the construction of buildings’ foundation, and this certainly leads to the higher cost of construction.

Lam Van Chuc, Director General of Phuc Duc Property Company, also said that the real estate market would bounce back again in 2008 for many reasons. The state will impose the personal income tax on real estate assignments. Meanwhile, the demand for land and houses will increase as the Government has turned the green light on the house purchasing of foreigners and Viet Kieu.

Nguyen Manh Ha, Director of the House Management Department under the Ministry of Construction, believes that the property market would be hot thanks to the high inflow of foreign capital.

According to Mr Ha, there are 13 operational foreign investment funds in Vietnam which target real estate investments. Some of the funds have been raising more funds from the public, and the move can be understood that the funds are planning long term investments in Vietnam.

In the last two years, a lot of big real estate projects capitalized at several hundred millions dollars have been kicked off, including the Bac An Khanh new urban area in Ha Tay province, Keangnam Landmark Tower in Hanoi, and Kumho Asiana Plaza in HCM City.

The high inflow of overseas remittance is also believed to make the real estate market hotter in 2008. It is estimated that some $5bil have been remitted into Vietnam, and a part of which will be injected in land and houses. Vietnamese people have the habit of purchasing houses in last or first months of a year.

(Source: VnMedia)