Real estate businesses in southern Vietnam are racing on the road to recovery after a period of 'hibernation” by launching new products.
Spring back
According to the Ho Chi Minh City Real Estate Association's (HoREA) latest report, the southern property market has been stagnant final months of 2022, with no new projects and few transactions. The main reason was tightened credit and interest rates soaring to 14.5% at most commercial banks.
But it seems that this iceberg has started to melt since the beginning of February when the market welcomed newly launched projects.
Hung Thinh Land recently launched the 9x An Suong project in the northwestern area of Ho Chi Minh City. The project, covering an area of 9,500 square meters, comprises two apartment blocks, each containing 25 floors and one basement, with a total of nearly 800 apartments from one to three bedrooms.
It is one few apartment projects to be launched in HCMC and the city’s northwest. Apartments are up for sale from only VND1.6 billion ($67,500), targeting middle-income earners, a segment that was considered 'extinct' in the southern economic hub.
Novaland has began pushing forward with residential and resort real estate products, with NovaWorld Phan Thiet in Phan Thiet town in Binh Thuan province, NovaWorld Ho Tram in Ba Ria-Vung Tau province, Aqua City in Bien Hoa town of Dong Nai province, and Sunrise Riverside in District 7, HCMC.
Tran Anh Group in mid-February 2023 launched the next segments of the 100-hectare Phuc An Asuka villa, townhouse and shophouse project in Chau Doc town, An Giang province, with a price of VND3.2 billion ($134,900) per townhouse.
Asian Holding Real Estate JSC has offered for sale The Eco Point project in Dong Xoai town, Binh Phuoc province. The highlight of the project is that customers will receive home ownership certificates right after the transaction is completed.
Meanwhile, Cat Tuong Real Estate Group JSC, which was absent throughout 2022, returned to the market in early February with the launch of the Cat Tuong Park House project in Chon Thanh township in Binh Phuoc province. The 8.3-hectare project has a total investment of $22 million.
Other developers returning to the market include Rio Land with the MT Eastmark City apartment project in HCMC’s Thu Duc city, and Nam Long Group with projects in HCMC and neighbouring Long An province.
Sales policy changes
According to Nguyen Hoang, a real estate researcher, the market has been frozen due to a number of reasons, notably buyers’ cash flow congestion.
Under the traditional sales policy, to buy a house, customers must make a deposit of VND50-200 million ($8,400) and then pay 30% of the property's value when they sign the purchase contract before getting a bank loan.
With a lending interest rate of about 14.5% currently, customers are no longer interested.
To deal with this, some businesses have offered new policies to help customers buy houses without a high-interest bank loan.
For example, to buy a house at Hung Thinh Land’s 9x An Suong project, after making a deposit, customers only need to pay 8-12% of the value and then give the investor from VND7-8 million ($337), or 0.5%, per month. When the payment reaches 30%, they can sign a purchase contract and continue to pay about 3% per month.
This sales policy is being also applied by other real estate businesses such as Tran Anh Group's Phuc An Asuka project.
Ha Van Thien, deputy general director of Tran Anh Group, said that the firm was trying to help homebuyers be less dependent on credit. To buy a house at the Phuc An Asuka project, customers only need to pay 12% initially and then 0.5% (about VND7 million or $295) per month.
"This is considered a smart policy for this investor, solving the difficult problem of accessing bank loans and helping laborers buy a house. Besides, this policy also directly helps ease the business’s dependence on credit for project development,” said Dr. Vo Hong Thang, lecturer of the Macroeconomic Department under the University of Economics Ho Chi Minh City.
Thang said that the market is stagnant due to a lack of residential real estate supply while demand for housing remains high. Therefore, if bottlenecks are removed to create new supply, market liquidity will recover.
The current bottlenecks remain credit and legal issues. Businesses cannot wait for a rescue from the government and ministries, so they have launched new policies for customers, he noted.