» » Developers lower their sights

Property investors in HCM City are revising their business plans this year as a result of a stagnant real estate market and the tightening of bank loans.

Huynh Huu Phuoc, general director of Construction Investment Company No8, said 2007 for his company was highly successful, with the building of new urban areas such as the Phu Hung new urban area in Can Tho, the Dong Nam Thuy An urban area in Hue, and projects in HCM City such as the Green Building in Binh Thanh District.

However, this year Phuoc said because of the tighter financial market, the company’s plans and target set in 2007 for this year had not been achieved.

Phuoc said in the next five years the company would build about 1,000 apartments for medium- and low-income buyers, a market that needs to be better served.

The industry has reported that land plot transactions have been slow since Tet (Lunar New Year), even in hot areas such as Phu Loi – Binh Dien in District 8, East Thu Thiem in District 2, and Thoi An in District 12.

Prices have fallen at least 12 per cent on average for apartments, from VND8 million to VND12 million (US$500 – 750) per square metre.

Industry experts said the prices will recover when the amended Decree 90 goes into effect to allow overseas Vietnamese and foreigners to buy houses and land plots in Viet Nam.

CB Richard Ellis, a HCM City-based property management firm, reported that real estate rentals for luxury apartments were also stagnant and prices would drop an average of $100. An apartment at the Vista building will now sell for $2,300 per sp.m, for example.

Vu Quoc Thai, director of research at the Viet Nam Real Estate Company (VietRees), said April’s price for high-grade apartments fell by 10 per cent against March.

Most property speculators said apartment prices had dropped by 30 to 40 per cent since March.

According to statistics from VietRees, successful transactions in March fell dramatically, 82 per cent, and will probably continue to fall.

It said the market for high-grade and medium-grade apartments had slumped, adding that the demand for medium-priced apartments remained high.

The HCM City’s People’s Committee has encouraged local enterprises to build apartments for low-income residents, and foreign companies are expressing more interest.

Despite the current sluggishness, industry insiders expect the market to recover because of the intense interest shown by foreign investors in building luxury offices for lease, hotels, and high-grade apartment buildings.

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