Sensible choices will prime market
Sensible choices will prime market
Industry experts are predicting that 2014 will continue to see raised liquidity in the real estate market, particularly in the low and medium-cost housing segment. VIR talked with some industry players to hear their predictions for the new year, and which government policies could affect the industry’s fortunes.
Tran Nhu Trung Deputy director of Savills Hanoi
The most promising aspect of the real estate market in 2013 was the quarter-on-quarter increases in liquidity. The number of transactions was less than 10 per cent, but still reflected an improvement.
Offices for lease are always one of the other important segments often considered a measure of an economy’s health. In 2013, new tenants appeared. This proves that the economy is showing signs of recovery. In 2014, the real estate market is still very much dependent on the recovery of the economy. Therefore I predict that there will be no real estate market boom, because the recovery of the economy is not predicted to show remarkable fluctuations. In this context, the residential segment is still a foundation for the market with increased liquidity. The market will improve gradually and I expect the beginning of the recovery cycle to last from 2014 to 2016.
Le Chi Hieu Chairman of Thu Duc Housing Development Corporation
The biggest difficulty for the market is low liquidity. However, this isn’t due to low demand for housing, but the imbalance between supply and demand. In Ho Chi Minh City at present, despite reports of large inventories, buyers can’t find suitable products. Of the more than 10,000 apartments on sale in Ho Chi Minh City, more than 70 per cent are over 70 square metres, while the majority of demand is for smaller housing. I think that the market will remain unchanged until mid-2014, and could be better after that. However, how it will change still depends on many factors, of which policies are the most important.
Many developers are looking to adjust the scale of their projects in order to realign them with market demand.
Doan Chi Thanh General director of Hoang Anh Saigon Real Estate
2013 was the most difficult year for the real estate market. However, we saw better signs toward the end of the year. I think that some segments will improve this year, including mid-priced projects which are implemented by prestigious developers, projects which are entering the closing stages, and projects which are making good progress. In addition, recent permission of the government permitting developers to sell land without structures on them will heat up the segment this year. Unfortunately, all other segments will continue to face serious issues this year, especially projects which are still under-construction.
2014 could be better than 2013, but it depends in many factors. If interest rates continue dropping and policies to permit developers to scale down their developments are pushed through, then liquidity will be better for sure.
Tran Duc Dien Director of Maxland Real Estate Trading Transaction
The most impressive aspect of the real estate market in 2013 was the remarkable improvement in liquidity. The number of transactions through Maxland increased by 35 per cent.
The reason for this improvement, I may say, was that customers’ confidence gradually returned, and the price of real estate products also reduced to be closer to the affordability of average incomes.
Apart from that, the market has been also supported by a range of policies from the government’s ministries and bodies, as well as the efforts of developers to keep their projects on-schedule. 2014 will be still a difficult year for the real estate market, but liquidity will certainly continue to improve.
Nguyen Van Cuu General director of HANDICO
I think the market in 2014 will not be prosperous for all segments. However, opportunities will be there for professional investors and developers. Apart from having good finance and limited loans, those developers also have to choose the right market segment, in order to provide reasonable and affordable prices for their products, only then can they survive in the market. I think opportunities are opening up in all segments, but the trend is still towards affordable and mid-priced housing where demand is large. In Hanoi, concerns over the oversupply of social housing are understandable, particularly as those projects are far from the city centre and served by sub-standard infrastructure. Projects in good locations and with reasonable prices will remain desirable.
Nguyen Van Duc Deputy chairman of the Ho Chi Minh City Real Estate Association
Expectations for 2014 remain uncertain. The declared real estate inventory is not accurate, and I think it may actually be three times higher than current figures. Therefore developers must be more careful with the outcome of the products even if they have land and finance in their pockets, including newly built or merger and acquisition projects.
In the coming year, there will be a trend to build small scale apartment projects. I think that price is only one factor, and more importance is that buyers can’t spend money they don’t have, no matter how much the price is reduced.
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