2007 with three fever attacks

Analysts have every reason to say that 2007 was an abnormal year in the history of the real estate market, when it saw three serious ‘fever attacks’ in February, August and November-December.

It was estimated that the total capital injected in the real estate market in 2007 reached $5bil, mostly from foreign direct investment (FDI) and overseas remittance. Statistics showed that 85% of the FDI capital flown into HCM City in the first 11 months of the year was pumped into real estate.

The land price rose by 80-200% in districts 2,7 and 9 in 2007, and increased by 70-80% in Binh Chanh, Nha Be districts. The prices of luxury apartments soared by two times compared to the levels initially announced by investors. Thousands of people scrambled to buy apartments of the River View, The Vista, Sky Garden 3 and Blue Diamond projects.

Brett Ashton, Managing Director of Savills Vietnam, a real estate services company, said that the real estate price saw a two-fold increase over the last 12 months and three times over the last 18 months.

The high growth rate of the real estate market, which promised lucrative profit to investors, attracted a lot of new investors. Truong Hai Automobile, VIettronic Tan Binh (electronics), Thanh Cong Textile, Kinh Do Group (confectionary and food), Vien Dong (Paper), Dong Nai Paint and REE (engineering) have also jumped into the bandwagon.

2007 witnessed the impressive success gained by local real estate firms including Nam Long, Hoang Anh Gia Lai, Him Lam and 584. Hoang Anh Gia Lai made a splendid appearance on the market when it announced that it would build 17,000 apartments with the total area of 17mil sq m.

2007 was also a good year for big foreign real estate investors, Indochina Land, VinaCapital, and a lot of Singaporean, Malaysian and the US companies announced in 2007 their huge projects in real estate worth several billion dollars.

Analysts all say that the real estate market would continue growing in 2008. Urban Land Pricewaterhouse Coopres (PwC) listed HCM City among the 10 Asian most promising markets.

2008: luxury products will be favoured

Analysts say that the real estate market would see the growth rate of 20-30% in 2008. Investors are gathering their strength to get prepared for new investments in the real estate in 2008.

The fact that Vietnamese people scrambled to purchase luxury apartments has told real estate developers what they have to build. It is expected that high quality apartments with modern western style will be favoured in 2008.

According to CBRE, a real estate commercial company, Vietnamese people tend to buy luxury apartments with good living environment. Le Hung, Director of Hoang Anh Construction and Housing Development Company, said that as Vietnamese people have higher income nowadays, they want to live in modern apartments with better living environments.

Apartments and offices of Saigon Pearl, Dragon City, Phu Hoang Anh, Saigon New, River View, The Everick, The Vista, Estella, Préche Thao Dien will be marketed in 2008 which have the prices of several thousand dollars per sq m.

David Blackhandll, Deputy Managing Director of VinaCapital said that the apartment price levels of $1,500-2,000/sq m in Vietnam is not so surprising. Meanwhile, Mr Ashton from Savills said that the office leasing may climb to $45/sq m in 2008.

Vietnam’s real estate market is so lucrative that 40 foreign investments, established with the total capital of $20bil, are ready to pump capital into the market.

Demand still exceeding supply

Analysts said that despite the higher investments, the demand will still be higher than the supply in 2008.

The demand is expected to increase dramatically in 2008 when the Government allows Viet Kieu to buy houses. It is expected that 16,000 Viet Kieu are eligible to buy houses.

Besides, as Vietnam attracts more and more foreign investment, the demand for offices to lease will increase sharply in 2008 and the next years. In 2007, according to Savills and CBRE, 97-99% of office buildings were leased.

Analysts say that lacking capital, the biggest problem for real estate development in the previous years, will not be a problem any more. FDI and the capital from overseas remittance will be injected in real estate projects. Besides, a big volume of capital will flow from the less profitable stock market to the promising real estate market.

Source: VietnamNet.