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VietNamNews

Prospects ‘bright' for property market

Update: March, 17/2012 - 08:52

 

Customers view a design model for the Ecopark property exchange. Real estate agents have forecast opportunities this year despite earlier difficulties. — VNA/VNS Photo Hoang Lam
HCM CITY — The real estate service provider Knight Frank Viet Nam says it finds cause for cautious optimism about the property market this year despite 2011 being a tough year.

While the property market had been suffering from a "hangover" for the past two years, there were a number of key indicators that would have a positive effect on the market, the company said in a press release.

It cited as an example the State Bank of Viet Nam (SBV)'s announcement of a reduction of 1 per cent in the deposit interest rate offered by commercial banks, from 14 to 13 per cent.

Inflation had been on a downward trend for some months and was set to stabilise in 2012, it said.

The company noted that the stock market had been one of the world's top performing equity markets so far in 2012. The benchmark index for the main bourse, the HCM Stock Exchange, had seen growth in excess of 20 per cent so far this year.

"Due to a downturn in the market over the past two years, we believe there is a huge amount of pent up demand for real estate, in addition, the number of international investors contacting Knight Frank has risen dramatically over the past six months. For these companies Viet Nam, alongside China and India are all on the radar," the company said.

Investors will have an opportunity to purchase assets in all sectors for prices considerably lower than two years ago and with a large number of developers with deep financial burdens keen to offload their assets, "we anticipate 2012 will see increased activity."

Stephen Wyatt, Country Manager for Knight Frank Viet Nam, commented: "The difficulty for most investors is timing, predicting the future trend of the market and knowing that they are not buying at the ‘top' of the cycle.

"As with any property investment anywhere in the world, the key is location and understanding the market. There is no question that Viet Nam still offers huge upsides for any investor over the medium to long term. We are seeing strong demand for many of the investments, land and developments sites that we are currently selling. With renewed optimism and a return of confidence, 2012 is the time to start looking at investing in the country."

Lower interest rates

Many domestic real estate companies say the central bank's 1 per cent deposit interest rate reduction would not help the ailing market.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Co, said it would only be a temporary solution in helping housing developers overcome current difficulties.

Developers needed capital more than reduced interest rates to complete projects, he said, citing a number of halted developments in HCM City. Many had resorted to borrowing money at usurious rates in efforts to fulfil contracts and reduce losses.

Tightened monetary policies should be reversed to help the suffering real estate market survive, Duc stressed.

General Director of Vinh Gia Real Estate Co Ngo The Vinh said that without loosened policies, an interest rate reduction of 2 per cent or more would unlikely improve the current situation.

Former Deputy Minister of Natural Resources and Environment Dang Hung Vo told the newspaper Cong Thuong (Industry and Trade) that while the current rate reduction was a good sign, it would have little effect, seeing as commercial banks with low liquidity were unable to provide loans to real estate projects.

Nguyen Van Hung, Ha Noi Real Estate Development Board of Directors chairman, said that the rate reduction was indeed necessary and might lead to a downward trend.

He forecast that market conditions would improve by the end of the third quarter this year.

Several other experts said that due to lowered deposit interest rates, investors might transfer funds from banks to property, which could help warm up the frigid market. — VNS

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