Explaining this, Vu Quoc Thai, Analysis Director of VietRees, said that overseas remittance (the money sent by Vietnamese overseas to their relatives in Vietnam) has not been poured into the real estate sector like in previous years, but has been used for resuming production or paying debts. Many real estate development firms are seriously lacking cash to maintain their operation, and they seem to be unable to get further loans from banks.
Meanwhile, Thai said, some banks have been trying to sell high-grade real estate mortgaged by clients, or have been trying to extend debt payment, so that clients have more time to sell real estate to obtain money for paying debts. The low demand in the national economy, the difficulties in accessing credit and the matured credit contracts have forced real estate developers to sell real estate at low prices, which is proving to be even lower than the initially set prices.
Luxury apartments unsalable
The percentage of successful transactions seemed to be a little higher at the end of the year in comparison with previous months. However, most successful transactions focused on low-cost apartments, while very few transactions have been reported for luxury apartments.
However, the supply of low-cost apartments proves to be limited, and the sale prices in this segment of the market did not see any big changes in December, in comparison with the previous month.
Luxury apartment prices reportedly continued decreasing in December. According to VietRees, the price decreased by approximately 6% compared to November 2008, which proves to be the sharpest decrease since June 2008.
The prices of many apartments in Phu My Hung urban area and other areas in districts 2 and 7, though having seen the prices decrease by over 50%, still find it difficult to find buyers. With the current conditions of the market, VietRees has predicted that luxury apartments will go down further in prices after Tet.
The gloomy market has forced a lot of investors, who jumped into the real estate sector after they found it profitable, to return to their main business fields. A lot of investors are facing big challenges as they do not have cash and they cannot find buyers.
If the situation continues, some real estate developers will have to bargain projects away and escape from the market in 2009.
Injecting money in low-cost houses advised
According to VietRees, after Tet, which will come at the end of January, the real estate market will be the ‘playing field’ for investors who have huge capital and aim for long-term investment plans.
It said that real estate developers should focus on apartments with sale prices suitable to medium-income earners instead of high-cost projects. The low-cost and medium-cost projects can be sold quickly, which allow investors to take back capital for re-investment. In fact, the demand for low-cost apartments remains very high as real estate developers did not focus on this segment of the market
VietRees said that investors should inject money in apartments with an area of 40-60 sq. m., which have the sale prices of VND 10 million per sq. m. or lower, which means the value of VND 400-600 million/each apartment. The investors should target young families, students and office staff.
(Source: TBKTVN
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