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Speculators avoid slumped apartment market

Update: December, 29/2012 - 08:30

HCM CITY (VNS)— The lack of buyers despite significant price reductions and other sweeteners shows that secondary investors and speculators have disappeared from the residential apartment market segment, industry insiders say.

A real-estate broker told Viet Nam News on condition of anonymity that in the current situation, the only interested buyers are those who have real need for housing.

And they are only interested in finished products, he said.

"No one wants to pour money to the projects that are not complete. This year, money from overseas Vietnamese has also declined, so the market is grey," he added.

He said apartments are not very marketable products at the moment, with sales having fallen by about 60-70 per cent over 2011.

Prices slashed

The prolonged economic slump and stagnant market have forced apartment developers to reduce prices in order to attract more consumers.

Nguyen Khac Minh, an employee of the Dong Hung Real Estate Company in HCM City, said they were offering apartments at 20 to 30 per cent less than their original price.

"Due to a capital shortage, investors of many projects such as Phu Hoang Anh in District 7, Chanh Hung Giai Viet in District 8 and Hoang Anh River View in District 2 have already announced lower prices," Minh said.

He noted that a project in District 8, for instance, had an original asking price of VND20.4 million (US$970) per one square metre. Now, it was down to VND16 million ($762), excluding value-added tax, he said.

Other investors, while not directly cutting down prices, are offering attractive "presents" to buyers of their apartments.

A Dau Tu (Investment Review) newspaper report says that from the middle of this month to the middle of next month, customers buying apartments from The Flemington project in District 11 will receive a free furniture design package valued at VND1 billion ($47.000).

Project Ventura in District 2 is also offering customers a VND500 million ($24,000) cash gift for those who buy their apartments from now until the end of next month.

In Ha Noi, the Mai Linh Investment Joint Stock Company has decided to cut prices of its Golden Palace apartments by 35 per cent to VND20.5 million per one square metre.

Apartment prices in the Ha Do Parkview complex in Cau Giay District have declined from VND29.5 million ($1,400) in September to VND22.2 million ($1,000) per one sq.m.

While difficult economic conditions and pressure from banks for repayment of loans are cited as the main reasons for the falling prices, there seems to be no move by investors to tap the low-income housing market as suggested by the Government.

The government had suggested that investors modify their apartment designs to make them more affordable to lower income people.

For now, the latest reduction in prices as well as other incentives offered by developers have failed to animate the stagnant market.

Minh said that interested buyers were expecting prices to fall still further. —VNS

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