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Developers battle market stagnation

Update: June, 04/2012 - 10:12

 

Apartment buildings along Ha Noi's Tran Duy Hung Road. Vacant units reflect a frozen market. — VNA/VNS Photo Hoang Lam
HA NOI — Property developers are still facing tough times as every effort made to stimulate the stagnant property market seems to have had little effect over the year.

To sell their property products, real estate companies have had to offer many promotions.

Phuc Khang Real Estate has sought ways to sell its eco-villas by opening a showroom in Big C Supermarket to draw customers, but with few results.

In a similar move, CEN Real Estate Group, one of a largest property transaction companies in Ha Noi, opened its 2,000sq.m project supermarket last week to offer customers as many choices as possible, said Pham Thanh Hung, company deputy director.

Nguyen Van Kha, CEO of Tu Liem Housing Development, said sales at supermarkets or entertainment centres were common in Thailand, but new to Vietnamese customers who were used to buying from transaction floors.

According to Nguyen Van Duc, deputy director of Dat Lanh Real Estate, despite sluggish sales, property developers who wanted to survive must study and seek new sales methods to attract new customers.

Duc added there were two methods to approach customer, mostly favoured by property transaction companies in HCM City. They could select a distribution channel to sell their products or they could conduct shocking promotions offering big discount to buyers.

Hoang Anh Gia Lai selected the second method by selling products at 50 per cent discounts.

Nguyen Huu Cuong, chairman of the Ha Noi Real Estate Club, said land developers who wanted to sell their products faced danger. He explained that if they offered products at high prices, buyers would not accept. If they offered their products at low prices, they may suffer losses.

Vu Cuong Quyet, director general of Dat Xanh, said property developers were still waiting for further interest rate cuts that would help boost sluggish sales on the stagnant property market.

Nguyen Van Kha of Tu Liem Housing acknowledged that over the year, the domestic property market received great support from the Government. However, it did not yet have any effect on the market. For instance, a VND29-trillion (US$1.39-billion) finance package aimed to reschedule tax for businesses had little impact.

Kha said businesses were allowed to borrow money from banks thanks to central bank policy to loosen tightened credit loans. However, with the high ceiling of lending interest rates at between 14-15 per cent, property developers could go bankrupt if their products remained unsold.

Bui Minh Chinh, general director of Petroland, said if the ceiling of lending interest rates went down to between 12-13 per cent, property developers would still not want to borrow capital from banks. He attributed this to sluggish sales.

Pham Thanh Hung of CEN said land developers could now borrow capital to invest in construction projects. However, they could not find customers and they were rather afraid of investing in new housing projects.

Nguyen Viet Do, deputy general director of Song Da Thang Long, said: "If we want to see the stagnant market bounce back, the Government needs to limit granting construction licences for new housing projects and revoke those from sluggish projects. It also needs to continue outlining policies to stimulate housing demand by further cutting lending interest rates and offering more loans for property developers." — VNS

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