Property market warming up: Minister

The real estate sector's inventory reached VND94.458 trillion (US$4.48 billion) on December 15, 2013, registering a decrease of 26.5 per cent over the first quarter of last year, according to Trinh Dinh Dung, Minister of Construction.

 

An aerial view of the Trung Hoa-Nhan Chinh residential area in Ha Noi.The real estate sector's inventory reached VND94.458 trillion (US$4.48 billion) on December 15, 2013.

In an online conference to review the construction sector's performance in 2013 and create plans for 2014, Dung said the property market had shown improvement, especially during the last few months of 2013.

According to Dung, the property market, which had been frozen for years, was warming up, as indicated by the soaring number of transactions.

The ministry's statistics showed that successful transactions of smaller apartments in the second half of 2013 had doubled when compared to the first half of the year.

In Ha Noi, an estimated 6,450 transactions of real estate projects took place, about half of which were conducted during the fourth quarter of last year.

Transactions in HCM City numbered 9,360, with nearly 70 per cent of them seen in the second half of the year.

Dung also said that higher than average credit growth for the real estate market had helped speed up the construction of unfinished projects, which had stagnated due to a lack of capital. Consumer confidence also recovered with these improvements.

Regarding the real estate inventory, the ministry said that more than 20,000 apartment units remained unsold in Ha Noi and HCM City, for a loss of VND24 trillion ($1.14 billion). The land inventory was estimated to be worth VND34.89 trillion ($1.67 billion).

Dung said that during 2013, the real estate market had improved to meet the market demand with an increasing supply of social housing projects and smaller apartments with more affordable prices.

Fifty-seven of them had registered for conversion into commercial units or for social purposes, with a total of 34,800 apartment units, and 62 other projects had adjusted their structures.

Housing prices saw a decline after reaching a peak during 2008-10.

The ministry said that most projects had decreased by 10 per cent to 30 per cent and some by up to 50 per cent.

The average housing space per capita also increased 0.6 square metres to 19.6 square metres.

The ministry's statistics also showed that 10,635 real estate companies were established last year, while about 10,077 companies had dissolved or halted operations in the same period.

Busy year-end

The HCM City property market saw a busy year-end as foreign food and beverage retailers sought out locations for franchises, including Aeon Mall, McDonald's, Dunkin's Donuts, Super Sport and Dairy Queen.

"In 2015, Viet Nam will have to accede to its WTO obligation to permit the opening of wholly foreign-owned retail businesses, which will generate demand for retail space from foreign retailers entering the Vietnamese market," said Marc Townsend, CBRE managing director.

Like Starbucks and McDonald's –soon to open its first restaurant in the country –many additional food and beverage retailers will likely target the Vietnamese market, Townsend said.

The average vacancy rate for purpose-built retail space stayed at approximately 12 per cent, according to CBRE's Q4 property report.

Last year closed with a slightly brighter picture for serviced apartments, as rents decreased at a slower rate and occupancy remained flat. Both Grade A and B rents continued to slide down by 0.1 per cent and 0.4 per cent QoQ respectively. They are currently at US$30.31 and $22.90 per sq.m per month.

Grade B witnessed a significant decrease of 9.8 per cent YoY and provides a larger room for discounts, indicating that Grade A projects performed better.

Le Hoang Lan Nhu Ngoc, senior manager of Research and Consultancy Services, said although rents had been revised down for ten quarters, vacancies still fluctuated due to tightening housing budgets and the increasingly competitive buy-to-let sector.

 

CBRE enquiries with budgets below $2,000 per month, which better fits buy-to-let options, reported constant expansion in recent years and accounted for more than half of the total enquiries in 2013. 

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