Property market to remain gloomy throughout 2013
Property market to remain gloomy throughout 2013
Despite receiving support from the government, economic difficulties are expected to keep Vietnam’s real estate market down until the end of 2013, veteran experts have said.
Many experts participated at a seminar on real estate market prospects held last week in Hanoi by Vietnam Investment Review said the real estate market could likely be recovered by the end of 2013, after the banking system finished its restructuring and investment capital came back in to the sector.
Bui Tat Thang, head of the Development Strategy Institute under the Ministry of Planning and Investment, said that the downturn of the real estate market was caused by microeconomic difficulties and many property projects could not be sold.
“I anticipate that a range of real estate companies will give up because of capital shortage,” Thang said.
He said the real estate market could recover only when appropriate policies on gold transactions and overseas remittances were enforced.
“A large amount of gold is kept by local people with an estimate of around $40 billion equivalent, while overseas remittance to Vietnam amounts to $10 billion per year,” Thang said.
“Given the real estate market is thirsty for capital investment, those capital sources could make the market recovered,” he said.
Nguyen Quoc Hiep, chairman and general director of GP Invest, said the real estate market now needs a stable investment flow.
Hiep predicted that such a flow could only resume after the banking system finishes its restructuring strategy, possibly by the middle of 2013.
“The banking sector is like the heart, capital is like the blood and the real estate market is like the body. So the real estate market is heavily depending on the banking system,” Hiep said.
Dang Hung Vo, former Deputy Minister of Natural Resource and Environment, said that real estate market would have less opportunities to recover within 2013.
“The most important thing now is to find out the way to resolve thousands of unsold houses and apartments in the market. Developers would have to reduce their prices in order to escape from the stagnation,” Vo said.
Leon Cheneval, managing director of Cushman & Wakefield Vietnam said that property developers would still face difficulties in 2013.
“The market now is depending on the buyers when developers and secondary investors could not sell their properties,” said Cheveval.
According to CB Richard Ellis Vietnam, 90 per cent of buyers were still hesitating to spend on real estate because they are worried about the economic situation. Therefore, a huge amount of capital is still kept in saving accounts instead of trading gold or properties.
Meanwhile, Savills Vietnam’s head of research Do Thu Hang said that developers, buyers, and speculators are now waiting for a warmer market, and that there is real demand for units priced from VND1 to 2 billion ($476-$952) per unit.
“There is still light at the end of the tunnel, which is reserved for lower- and mid-end units,” Hang said.
An expert from the State Bank said that in the coming time, when credit for high-end properties will still be tightened, banks’ loans will still be available for nearly finished projects and social housing projects.
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