Viet property market seen bottoming out

Prices at some developments may even rise 5-10% by end 2009: CBRE

THE residential property market in Vietnam is likely to have bottomed and prices at some developments may even rise 5-10 per cent by the end of this year, according to real estate consultant CB Richard Ellis (CBRE).

'There won't be anything like the demand we saw in 2007 and 2008, but at least it has stopped going down,' CBRE Vietnam's managing director Marc Townsend told BT.

From its peak in 2007, Vietnam's property market began cooling last year as inflation soared, interest rates shot up, and construction costs increased. The global financial crisis weakened the sector further as international investors stayed on the sidelines.

The average asking price for luxury apartments in Ho Chi Minh City, for instance, fell from more than US$5,500 psm (US$511 psf) to just over US$4,500 psm over 2008, CBRE noted.

But some economic factors have since improved. According to Bloomberg yesterday, inflation in Vietnam fell to 9.23 per cent in April, from a high of 28.3 per cent in August last year. Mr Townsend said lending rates and construction costs have also eased.

While the economic slowdown has led to lay-offs in Vietnam, most white-collar workers still have their jobs, he noted. In many cases too, expatriates have been the first to go, benefiting locals who got to fill their positions.

More importantly, some Vietnamese developers have trimmed asking prices to revive buying interest.

CBRE noted that one developer recently launched projects at prices more than 30 per cent lower than those last year. The company could have sold over 530 apartments in just four days, it said.
Singapore developers have not trimmed prices so far, Mr Townsend said. 'They have waited . . . and their patience has been rewarded with a strengthening of the market.'

Keppel Land's recent release of more units at the Estella is an example, he said. The developer told BT it offered a limited number of units early this month and there was 'an encouraging increase in the number of sales and enquiries'.

While Keppel Land kept the average selling price constant at US$2,000 - US$2,200 psm, it introduced - its first time in Vietnam - an optional staggered payment scheme for buyers.

Based on current sentiment, some residential properties may be able to achieve slight price increases this year, Mr Townsend said. Most developers are careful and will release a small number of units to test the market and create interest before raising prices, he said.

Source: Business Times, 21 May 2009