Posted on 13 Jan 2009
Real estate investors who are financially strong and possess sound investment strategies should prosper in 2009, according to market experts.
Industry experts say the new year will likely create opportunities for investors to develop projects and receive attractive returns.
Land prices have been dropping dramatically, which will help property developers hasten work on land clearance issues.
Developers will also be able to significantly cut costs since the prices of many building materials have fallen sharply.
In addition, the demand for housing of different kinds remains high, with the price of apartments at projects that have either been completed or still under construction stable. Among those are the Manor and Golden Westlake in Ha Noi.
Property projects whose owners have gained high prestige in the community are also much in demand, including investors like Keangnam and Hyundai RNC, and Vincom and Indochina Capital.
Although their projects, including Ha Noi Landmark Tower, StarClass, Vincom Park Place and Indochina Plaza Ha Noi, are now in the first stage of construction, many people want to buy their apartments.
Keangnam sold all of its 400 luxury apartments right after the firm showed its model apartments, as have Vincom and Hyundai RNC.
Meanwhile, the market for low–and medium-income earners still has potential since the country has an average of 50,000 new families each year, most of them with no homes.
Sifting out the bad boys
Experts, however, said that not all real estate investors could benefit from such market advantages.
Le Hung, general director of the Hoang Anh Joint Stock Company, said in the past many enterprises did not have financial capacity but they still participated in developing property projects with capital being raised from people who wanted to buy their apartments.
"Now the Housing Law requires property project developers to finish the construction of foundations for their commercial buildings before mobilising capital from customers," Hung said.
"This means that property investors must prepare certain capital sources when they want to participate in property projects," Hung said.
In addition, most consumers now had good understanding of legal regulations so they will choose projects that meet such requirements, he said.
Unqualified real estate enterprises will be put out of this lucrative game, Hung added.
Industry insiders said last year was a difficult one for the sector and challenges would continue in 2009, particularly those who lack capital and business experience.
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However, according to Nguyen Xuan Chau, general director of the Novahomes Joint Stock Company, the number of enterprises that have financial capacity to develop projects are 200, of which only 100 have enough capital or expertise to overcome the market’s current hardships.
To survive, many inferior companies have had to invest in other industries or sell their projects. Mergers have also been another option for many small enterprises to exist, Chau said.
Indeed, a majority of Vietnamese real estate companies have limited capital so they have to rely on bank loans.
According to the central bank’s report, by November 2008 the entire banking sector’s total loans put into the real estate sector was VND115 trillion (nearly US$6.8 billion), 73.9 per cent of which had been poured into Ha Noi and HCM City markets.
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The bank loan-based property enterprises encountered financial problems when the real estate and financial markets changed as they did during last year.
In particular, many of them are faced with bank debts equal to thousands of billions in Vietnamese dong.
