Market sees busy trading of mortgaged real estates

The market recently has seen the busy transactions of foundation land lots at cheap prices because these land lots were “mortgaged” assets of overdue loans while the market has been in frozen status for long time.
The bankruptcy series for the loss of liquidity has started since the beginning of fourth quarter of 2011 for which the market continued slipping despite authorities’ big efforts to rescue the difficult situation.

Data of real estate consulting firms showed that in Q4 alone, realty price slumped 10-20%, bringing total reduction in 2011 to 40%. This was the record fall so far.

Minh Son—representative of CBRE Vietnam property consultant—was quoted as saying that around 70% of projects suffered sharp drops of 10-40% in secondary offering prices.

Although prices plunged, there was almost no transaction in all segments. In Hanoi, some land lots are being offered at lower then 5-8 million dong per square meter than the average level, which is attracting the attention of investors and buyers.

Such cheap land lots are distrained assets (collaterals) because owners cannot pay off debts. In the agreements to borrow loans, if borrowers are unable to repay debts, creditors can distrain and sell mortgaged properties. Therefore, many creditors, after taking properties, sold at cheap prices. The volume of distrained products in each project is very small, around 5-7 land lots.

Typically, in Duong Noi D project, average trading price was 40-45 million dong per sqm but the offering price of mortgaged land was only 30-32 million dong/sqm. In An Hung project, the price of associated houses ranged between 62 and 65 million dong/sqm, and some land lots were offered at 50-52 million dong/sqm.

In Van Phu project, the associated house price was 50-55 million dong/sqm (applied on houses by small roads) and 60 million dong/sqm (applied on houses by large roads), but sometimes few land lots were sold at surprising price of 42-45 million dong/sqm.

Similarly, the segment of condominium also saw cheap prices. Average price of Van Khe condo project was 19-22 million dong/sqm.

According to Pham Nguyet Nga—Director of Phat Loc real estate trading floor, during the last one month, the volume of property offloading kept increasing and buyers showed up.

Big bankruptcy cases happened, raising the domino effect in large real estate markets such as Ha Dong and Dan Phuong. Black creditors (who provided black credit) had to offload mortgaged assets to repay debts. So, realty prices have been falling, which helped create a new price floor in Hanoi because buyers and investors usually take that new price floor as new comparative price with an expectation of cheaper prices, she added. – Vietbiz24

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