HCM City Real Estate Market: Indirect Discount for Apartments

VNRE - A race of support lending interests for customers in different styles has been ignited by Vietnamese real estate companies in order to attract the return of money flows.

Different discount forms

Promotion programmes were started by some investors in the third quarter of 2010 when the southern real estate market had few transactions. Customers of EcoLakes My Phuoc project (Binh Duong province) only need to pay 30 % of apartment value in many instalments and the loan starts bearing interests from the date of receiving the apartments. Last December, investors of Imperia An Phu (District 2, Ho Chi Minh City) also launched a similar programme but with a higher level of support. Customers can borrow up to 75 % of apartment value and the loan only bears interest when they are handed over completed houses. Recently, buyers of EverRich 2 apartments need to pay just 30 % of house value and rest will be settled in 2013 when apartments are transferred in 213. Buyers do not need to prove financial capacity.

Some investors presented interest to customers in a smaller scale. For instance, Thu Duc House supports 50 % of bank loans in 9 months for first 20 customers. Some others discounted for buyer groups, with discount mounting to VND100 million each apartment.

Unlike previous years, the market has not heated up, forcing many investors to cancel sales plans. A investor decided to return products as he could not sell it after he listed it on four trading floors. A new apartment project in Nha Be district also stopped selling because it failed to attract buyers.

Indirect discounts

Giving reasons for interest rate support, most investors said they wanted to share difficulties customers when bank rates soared. According to industry experts, interest rate supports, promotions and discounts are indirect forms of reducing prices. In real estate business, reducing selling prices will frustrate previous buyers. Therefore, this may be the last straw because the loss of value of projects will erode the confidence of investors in investment projects.

In a report on real estate trend in Ho Chi Minh City in 2011, Marc Townsend, General Manager of CBRE Vietnam, predicted: "Apartment segment will have more unsellable products because sales are not easy in the current economic context. Investors will have to change tactics if they want to survive." According to CBRE Vietnam's report, about 10,000 apartments could not be sold in HCM City in 2010 and investors are expected to supply 20,000 new units in 2011. This is actually an oversupply. At a recent seminar on investment, Dr Le Tham Duong, Head of Business Administration Faculty, Ho Chi Minh City Bank University, said: “If you buy a house to live, this is an appropriate time, otherwise, you should not because of policy risks and poor liquidity.

Source: VCCI News