Real estate investors who are financially strong and possess sound investment strategies should prosper in 2009, according to market experts.
Industry experts say the new year will likely create opportunities for
investors to develop projects and receive attractive returns.
Land
prices have been dropping dramatically, which will help property
developers hasten work on land clearance issues. Developers will also
be able to significantly cut costs since the prices of many building
materials have fallen sharply.
In addition, the demand for
housing of different kinds remains high, with the price of apartments
at projects that have either been completed or still under construction
stable. Among those are the Manor and Golden Westlake in Ha Noi.
Property
projects whose owners have gained high prestige in the community are
also much in demand, including investors like Keangnam and Hyundai RNC,
and Vincom and Indochina Capital.
Although their projects,
including Ha Noi Landmark Tower, StarClass, Vincom Park Place and
Indochina Plaza Ha Noi, are now in the first stage of construction,
many people want to buy their apartments.
Keangnam sold all of its 400 luxury apartments right after the firm showed its model apartments, as have Vincom and Hyundai RNC.
Meanwhile,
the market for low-and medium-income earners still has potential since
the country has an average of 50,000 new families each year, most of
them with no homes.
Sifting out the bad boys
Experts, however, said that not all real estate investors could benefit from such market advantages.
Le
Hung, general director of the Hoang Anh Joint Slock Company, said in
the past many enterprises did not have financial capacity but they
still participated in developing property projects with capital being
raised from people who wanted to buy their apartments.
"Now the
Housing Law requires property project developers to finish the
construction of foundations for their commercial buildings before
mobilising capital from customers," Hung said.
"This means that
properly investors must prepare certain capital sources when they want
to participate in property projects," Hung said.
In addition,
most consumers now had good understanding of legal regulations so they
will choose projects that meet such requirements, he said.
Unqualified real estate enterprises will he put out of this lucrative game, Hung added.
Industry
insiders said last year was a difficult one for the sector and
challenges would continue in 2009, particularly those who lack capital
and business experience.
According to HCM City's Planning and
Investment Department's figures, some of which are incomplete, the city
now has more than 5,000 companies involved in real estate.
However,
according to Nguyen Xuan Chau, general director of the Novahomes Joint
Stock Company, the number of enterprises that have financial capacity
to develop projects arc 200, of-which only 100 have enough capital or
expertise to overcome the market's current hardships.
To
survive, many inferior companies have had to invest in other industries
or sell their projects. Mergers have also been another option for many
small enterprises to exist, Chau said.
Indeed, a majority of Vietnamese real estate companies have limited capital so they have-to rely on bank loans.
According
to the central bank's report, by November 2008 the entire banking
sector's total loans put into the real estate sector was VND115
trillion (nearly US$6.8 billion), 73.9 percent of which had been poured
into Ha Noi and HCM City markets.
In HCM City alone, commercial banks injected VND61.2 trillion into property projects.
The
bank loan-based properly enterprises encountered financial problems
when the real estate and financial markets changed as they did during
last year.
In particular, many of them arc faced with bank debts equal to thousands of billions in Vietnamese dong.