Amid low liquidity in most segments, restoring homebuyer confidence is crucial to saving the ailing real estate market.
Real estate expert Nguyen Hoang argued that many businesses have lost their core values. They have failed to implement projects as committed, even though they received deposits or part of the contract value. The projects were not completed on schedule, leading to prolonged disputes between the developer and buyers. Some advertised their projects as having multiple utilities, but in the end, after many years, they are just vacant lots.
In the context of the quiet real estate market with low liquidity, developers must give top priority to regaining the trust of customers. To do this, they need to provide correct information about projects, especially their legality.
“They must strictly comply with the legal regulations, show their capacity and deliver clear commitments, without ambiguity or circumvention to push risks on customers. After all, it's the sales policy to support buyers," Hoang said, adding that in the real estate market, there are still many prestigious and quality developers who treat their customers well.
However, many customers have lost confidence as well as money when developers have not fulfilled their commitments.
For example, many people were "tricked" by Sieu Thanh Company when investing in its Kingway Tower project in Binh Tan district, Ho Chi Minh City. In 2018, they signed contracts to buy apartments but they have still not received their homes. In addition, the developer was prosecuted by the HCMC Police for "fraudulent appropriation of property".
In late 2019, the municipal Department of Construction issued a decision on administrative sanctions against the developer for violating its construction permit. After that, the department issued an appendix to the construction permit, asking the company to speed up the project, but the firm failed to comply.
In March 2020, Sieu Thanh informed customers that construction had halted due to Covid-incurred financial difficulties. Then it moved its headquarters and cut off contact with customers. Many people who were conned out of their homes have reported the matter to the authorities.
Similarly, the buyers of LDG Group’s projects have not received their homes although they have already paid the investor. In 2017 and 2018, LDG launched two apartment projects West Intela and High Intela in HCMC’s District 8. The two were advertised by the developer as projects with full legality, smart apartments, a convenient traffic location, and affordable prices suitable for young people.
Believing the company to be a big and reputable investor, many people chose to put down deposits. However, after more than five years, the two projects are still "under construction", with unknown completion dates.
An LDG project customer revealed that in early 2018, he made a deposit of VND30 million ($1,280) for an apartment worth VND1.8 billion ($76,500), and after 15 days paid 20% of the apartment's value. However, the developer then gave a notice extending the contract signing time.
"The developer required me to pay monthly and said the project was fully legal, but the project was not implemented on schedule. After more than five years, it has not been finished yet, and my family’s dream of having a home in Ho Chi Minh City is still something for the future," the customer said, declining to be named.
Customers as decision makers
The director of a real estate business in HCMC said that the market needs stability and sustainable development rather than “overheated” growth. But for profit, some developers have publicized false information about their projects and used every trick to inflate prices. As a result, people in need do not have a home, while the projects are not completed, leading to a waste of land.
"Project developers should pay attention to the needs of customers and focus on products that are accessible to the majority of people in need, in addition to other segments for investors," the director said. “This is a vital time for businesses. If they do not change directions and strategies and carry out projects in a methodical and thorough manner, it will be difficult for them to be accepted by the market, investors as well as customers,” he noted.
In order to create a healthy market, customers and investors must also be smart. They should not pursue profits or believe in advertisements without verifying information about the developer, the project and its legality.
Meanwhile, Nguyen Chi Nghia, deputy general director of Northern Green Land Real Estate and Services JSC, said that after three years of rapid development, the property market needs a new definition: customers will be the decision makers.
"The new real estate market will eliminate customers who make decisions based on emotions and use loans, and select real customers with qualifications and knowledge as well as professional and experienced brokers with a sustainable vision and high credit rating. Only developers offering good products with full legality and affordable prices can earn a place in this playground," said Nghia.
With credit tightened, many businesses are facing difficulties, but this is also the time for capable firms to assert their positions, he said, adding that prestigious developers who are capable of developing projects as committed will create projects worth living or investing in.