VietNamNet Bridge – The real estate price in 2012 dropped by 30 percent if compared with 2011.
“Frozen,” “immovable,” and “hibernation” are the worlds used to describe the real estate market in 2012.
The “VND10 million/sq.m” apartments
One of the hottest topics of the discussions on the real estate market is how high the apartment prices should be to fit the people’s pockets. The debate has been raised after the investor of the Dai Thanh project in Thanh Tri district in Hanoi marketed a certain amount of apartments priced at 10 million dong per square meter, the surprisingly low prices if compared with the market prices – tens of millions of dong.
The project’s investor then received violent criticism from other real estate developers, who believed that the investor attempted to dump products in the market to wipe down its rivals.
A lot of projects change hands
While the real estate market was frozen in 2012, the project transfer market was bustling, because investors had to bargain projects away to get money to pay bank debts. The investors ran out of patience and they could not wait until the day the market prospers again.
Most of the project transfer in 2012 took place in the south, where businessmen are believed to be more decisive than the ones in the north. The best-known projects include the golf course project in Nha Be district, New Pearl Residences in HCM city, Century Hotel in Hue City. However, a very special deal was made in the north: the transfer of Hanoi Daewoo Hotel on the “golden land area” in Hanoi to the Vietnamese partner Hanel.
Commercial banks pour huge capital into real estate sector
The overly hot development of the real estate market has been backed by the loans from commercial banks. In many projects, the actual owners were the commercial banks which lent 80-90 percent of the total investment capital.
Therefore, banks have been put on tenterhooks when the apartment products could not be sold. They had to join forces with real estate developers, launching sale promotion campaigns to attract buyers. Especially, some banks offered the loans with the interest rate of zero percent to boost sales.
Projects left idle
A lot of projects have been left idle by the investors, who met financial problems in the economic downturns. As a result, the land plots for the projects have become the park lots, stadiums or beer shops.
Hanoi authorities have decided to release an ultimatum to the projects’ investors, telling them to implement the projects immediately, or have the licenses revoked. For the record, 8.2 million square meters worth of project land have been taken back by the city’s authorities.
Conglomerates bog down in property projects
The government has decided to cut down the number of state owned economic groups from 13 to 5 or 7.
Two of the economic groups have been listed among the groups which need to be eliminated due to the bad economic performance. They are the housing and urban development group HUD and the construction industry group VNIC.
Real estate prices tumbled down
The movement of slashing sales prices and bargaining products away was kicked off in 2011. According to Thoi bao Kinh te Vietnam, the real estate prices in 2012 are 30 percent lower than that in 2011.
However, the real estate price decreases have not helped warm up the market. People still don’t intend to make purchases at this moment, because they hope the prices would go down further.
Compiled byC. V