Small property investors look for escape route

Many individual property investors in Ho Chi Minh City are willing to take a loss if they can sell out since they are under relentless pressure from the high interest rates on bank loans.

But not many are succeeding in selling their property since there are no takers despite the fact that prices have fallen.

Thanh, a real estate broker, said land in the Gia Hoa luxury project in District 9 now costs only VND15-16 million (US$755-800) per square meter compared with VND18-22 million last year.

Many other projects in District 9 like Tri Kiet, Nam Long, Khang Dien, Phu Nhuan, Bac Rach Chiec, Truong Thanh, An Thien Ly have also seen prices slide dramatically.

Though the investors have been bargaining away their lands, the market remains unresponsive.

Vy, an investor, said he has been placing ads to sell his land in Khang An in District 9 for more than a month in vain.

He bought the 144-square-meter land last year for VND12.7 million ($635) per square meter.

Now, even after lowering the price to VND11.5 million, he cannot sell it.

Binh, another investor, put two plots of land in the Phong Phu 4 project in Binh Chanh District for sale at a real-estate trading floor in May at VND11.5 million per square meter but no buyer has contacted him yet.

“An investor lowered the price by VND2 million ($100) compared to his purchase price but still could not find a buyer,” he said.

Many real estate investors said in the current context, with loans being tightened and interest rates unbearably high, it was unwise to invest in property.

“Prices may have declined dramatically but they still remain high,” Hung, an experienced investor, said.

“A land in a finished project costs at least VND1.5-2 billion ($75,000-100,000), not to mention the cost of building a house to meet developers’ requirements. So, not everyone has the wherewithal to buy.”

With no whiff of profits in HCMC for more than three years, many investors have been forced to sell at below cost price to cut losses.

Analysts attribute the slump in the property market to the speculation for instant profits and over-leveraging that was rife.

“Some investors borrowed from banks to buy property despite having just a seventh of the cost in hand,” Nguyen Xuan Loc, CEO of the Techcomreal real estate trading floor, said.

“When they property market went into crisis, the pressure from bank debts forced them to sell at a loss.”

He gave the example of an investor who had VND800 million ($40,000) in cash but bought two lands at a price of VND4.6 billion ($230,000) in the hope of making a killing.

But two years later, he still has not managed to sell them, he said. – Tuoitre

Tags: Ha Noi property market, vietnam real estate market