Home buyers show no fears during ‘Ghost’ month

Home buyers show no fears during ‘Ghost’ month

The apartment for sale segment is showing signs of recovery, with a significant increase in the sale of units in Hanoi and Ho Chi Minh City over the same period last year.

Ho Chi Minh City has seen spectacular growth in apartments for sale, with for the first time in the last three years, the number of apartments sold exceeding Hanoi.

Initial statistics from Savills indicated that during the first nine months of the year, real estate developers in Ho Chi Minh City sold more than 4,100 apartments, a 45 per cent rise against the same period last year.

Although lunar July is traditionally an inauspicious period for buyers to spend cash, the majority of units sold this year fell in the third quarter when more than 1,800 apartment units were sold in Ho Chi Minh City.

Savills claimed sales had been very positive in Hanoi with 11 per cent growth on the same period last year despite the superstitions associated with the ‘ghost’ month of July, because real demand existed, and buyers wanted to take the opportunity to secure accommodation at the lowest point of the market.

Indochina Land, the developer of the high-end Indochina Plaza Hanoi, announced they had sold 11 units in lunar July, taking the total number of units sold since the beginning of this year to an impressive 61.

According to CBRE, in the first nine months of this year, around 3,500 units were sold in Hanoi.

Explaining Ho Chi Minh City’s rapid sales, Marc Townsend, managing director of CBRE said that it was because the developers in the south had been more active, launching flexible and attractive promotion campaigns to woo customers.

For example, Phu Long Real Estate Company was offering a raft of incentives to buyers at their Dragon Hills project in Ho Chi Minh City with a price of VND25 million per square metre. Buyers have to pay only 30 per cent in advance, while the remainder can be paid in three years including the first year of interest free payments.

While such offers have been applied by many developers in Ho Chi Minh City to increase sales volumes, developers in the north had been less generous.

Hyundai Hillstate in Hanoi’s Ha Dong district is one of the few projects which allow customers to make a 30 per cent down-payment, while also benefiting from a year of interest free instalments.

However, CBRE noted changes in Hanoi market with more transactions in the high-end segment. High-priced products from $2,000 per square had gone through several quarters of stagnant sales activity, but positive sales in upper-end projects such as Lancaster, Indochina Plaza Hanoi, and especially Royal City were recorded in the third quarter. Another highlight is Hoang Thanh Tower project, which has made over 15 transactions of large units at over $4,100 per square metre since its launch one week ago.

CBRE said the sudden surge in market appetite for high-end products might indicate a few things. Firstly, demand and affordability for high-end products still exists, especially as standards of living continually improve. Secondly, good-value-for-money presents as a key to selling.

Richard Leech, executive director of CBRE in Hanoi said that with the large volume of unsold units, sooner or later, developers in Hanoi would have to follow Ho Chi Minh City with more flexible sales approaches.

Although many developers have stopped or slowed construction, Hanoi witnessed a record high of units completed this year.

Initial figures showed that around 13,000 units were completed in the third quarter, dramatically up on the 8,000 across last year.

While the number of developers in Ho Chi Minh City is larger, in Hanoi despite the number of completed construction projects being fewer, the number of units in each project is greater, leading to the remarkable increase in the number of completed units.

For example, a total of 8,500 units were provided by the Vingroup’s Royal City and the first phase of Times City.

Other large scale projects include Le Van Luong Residentials with 2,000 units, Mandarin Garden with 1,000 units, Mulberry Lanes with 1,500 units, Nam Do Complex with 1,000 units and Hyundai Hillstate with 928 units.

According to Savills, total future supply during 2015 and onward would reach approximately 82,000 units from 100 projects, with the main stocks located in Ha Dong and Tu Liem districts which will occupy 45 per cent of total supply.

vir