Capital flow coming back to real estate market

There have been signs showing that the capital flow, including foreign capital, is coming back to the Vietnamese real estate market after a period of interruption due to the global economic downturn.

Edward Chi, Chair of Coldwell Banker Vietnam, said that in mid September 2011, a group of US and Asian investors, with the arrangement of Coldwell Banker Vietnam, arrived in the country to seek the opportunities in the real estate market. Unlike other visits which just aimed to learn about the market, the investors really wanted to look for the feasible projects to disburse their money.

According to Edward Chi, this should be seen as a good sign of the real estate market, because the investors would bring capital to Vietnam at the time when it is really risky to make investment with bank loans. With the current high lending interest rates, real estate developers may go bankrupted if they borrow long term loans to develop projects.

Supposed that real estate developers can borrow money at the interest rate of 17 percent, with the three year capital turnover, the interest rate investors have to bear would be 51 percent.

“Will a real estate project be able to make profit of 50 percent, when everything, from material prices, electricity and water, and labor cost, are getting more and more expensive?” he questioned, adding that in this case, the capital to be brought by foreign investors would be a valuable capital source.

Dr Le Xuan Nghia, Deputy Chair of the National Finance Supervision Council, also said that some big US groups and investment funds he knows, including JP Morgan Chase, have come to Vietnam to seek the investment opportunities in some fields, including the real estate.

Nghia said that the presence of JP Morgan Chase could serve as a “driving force” for the real estate market in particular, and the national economy in general. International investors always keep watching the moves of big groups and investment funds to plan their disbursement.

“The interest rates are decreasing, while the consumer price index (CPI) also tends to decrease. The both factors show the possibility that the inflation would decrease. If so, the real estate market would begin recovering from early the next year,” Nghia said.

Hoang Anh Tuan, General Director of Tac Dat Tac Vang Company, said that the real estate market has warmed up a little as investors and clients have come back to the real estate market.

Especially, those people, who have the real demand for accommodations, not speculators, are now also seeking to purchase real estate products. Meanwhile, real estate developers have opened their products for sale as they have seen better signs on the market.

More successful transactions have been reported, especially the ones with low values. The Green River City project in Binh Duong, which has been opened for sale for the last two weeks, has reported satisfactory sale results. About 80 percent of the 200 houses which face two streets have been sold.

According to Doan Chi Thanh, General Director of Hoang Anh Saigon Group, the supply interruption for a long time, plus the high real demand for accommodation, both have warmed up the real estate market.

Meanwhile, though the input costs have increased by 30 percent so far this year, the prices of apartments have not increased. People now understand that it is the right time to buy apartments at reasonable prices, and if the banks loosen their credit policies, the real estate market would revive.

According to Edward Chi, high grade, medium class or popular apartments will all find customers. However, in long term, he believes high grade apartments would be the choice of many clients. There are more and more rich people who want to live in luxurious and environment friendly apartments.

Source: TBKTVN

Tags: Vietnam Property market, Vietnam property sector, vietnam real estate market