Could there be another real estate bubble?
22-07-2015 15:10:49+07:00
Could there be another real estate bubble?
Many real estate projects have resumed and capital flow to the market has soared. Analysts have warned that the real estate bubble is returning.
Having no need for apartments and land, Nguyen Van Thanh, an office worker in HCM City, still receives at least 20 messages about apartment sales a day.
“Messages come during the day and at night. I wonder if the real estate market is really so busy,” he said.
Apartment blocks, from middle-end to high-end, have been put on sale recently.
More than 200 apartments at An Gia Riverside in district 7 are on sale. The investor of GoldView in district 4 has announced the sale of 1,900 high-end apartments in August 2017. Tens of other projects developed by Dai Quang Minh, Novaland and Hung Thinh have also been put up for sale.
Residents in districts 2, 9 and Thu Duc who travel every day on Mai Chi Tho – Vo Van Kiet and Hanoi Highways can see many construction works, namely Masteri, Imperial An Phu, Lexington, Duc Khai, Sala urban area and the The Estella.
“There are several apartment projects under implementation on Do Xuan Hop street, near my house, though it is not a bustling area,” said Le Minh Nga, a finance officer. “It seems everyone poured money into the real estate sector.”
An official from the HCM City Real Estate Association (HOREA) estimates that Sala urban area and Masteri Thao Dien projects alone can provide 10,000 apartments to the market.
If counting the apartments of other projects in the triangle area, near district’s 1 center and Saigon River, the figure would be 30,000. If each apartment costs VND3 billion, the total amount of capital poured into the projects would be VND100 trillion.
“What will happen if the bubble deflates and the VND100 billion is buried under the projects?” he asked.
Le Huu Nghia, general director of Le Thanh Company, noted that 90 percent of the projects under implementation are expected to be completed by 2017. This means that the supply would be abundant in two years.
According to Nghia, while the number of buyers has increased by 50 percent, the number of projects launched by investors has increased by 500 percent. Therefore, the fear of oversupply and frozen real estate market could happen again.
Nguyen Van Duc, deputy director of the Dat Lanh Real Estate Company, noted that there were few low-cost (VND700-800 million) apartments available in the market, while middle-class apartments priced at VND3 billion or so are abundant.
Duc said that market development would be sustainable only if apartments priced at VND700-800 million dominate the market.
