The expansion of the city has seen investment from authorities, foreign speculators and developers to the tune of $8billion up to the 3^rd quarter of 2015.  Beneficiaries include:

• Transport improvements in the areas between Saigon Bridge and Vung Tau, including highway and bridge improvements, account for $3billion.
• New luxury units – around 40,000 individual residences – are under construction in Binh Thanh, Thu Thiem and District 2, with an estimated worth of $5billion.
• 300,000sqm of retail space are on their way in the same areas, as well as Thu Duc and District 9. Upon 2018 completion, experts predict a valuation of $300/1sqm for a total of $90million.

The Sun Avenue Apartment of Novaland developer in District 2

Experts excited

The estimates have emerged from reports by industry experts and observers.  One such company, who put forward the transport development figure, are Global Investment and Business Corporation (GIBC).  “We think this investment will result in a relocation of the city’s commercial and service sectors into these purposes built areas” said Mr Huynh Phuc Nghia of GIBC.

Another real estate expert suggested these investments represent a golden opportunity for investors.  “The follow on benefits from the $3billion infrastructure improvements are likely to be upwards of $5billion as additional commercial, recreational and educational ventures flock to the areas”, said University of Economics lecturer Ngo Dinh Han.

“The current central districts for these areas are saturated, and new additions like Thu Thiem Channel, Thu Thiem Bridge 1, Saigon Bridge 2, and Thu Thiem Bridge 2 are ideal in relieving some of the bottlenecks” continued Mr. Han.  “These new areas will also connect the city with outlying provinces, creating a greater metropolitan area, radically altering the shape of the city over the next decade.”

Connectivity to Saigon’s current central districts will be aided by completion of the Metro system, in addition to a new financial center in Thu Thiem.  Upwardly mobile Saigoneers may turn their attention to big new developments like Vinhomes Central Park and Sala premium residential areas over the next 2 years.

Such a churn of development leaves plenty of opportunities for investors, with prices in the new areas estimated at a quarter of D1/D3 equivalents.

Estella Heights apartment from Keppel Land and Tien Phuoc Developers

Some skepticism.

Not everybody is as taken with the sales pitch, however.

General Director of Viet An Hoa Company is one such skeptic.  “$8billion is an attractive headline number, but may not be entirely accurate.  The $3billion is in place but may not do the job of radically improving regional connectivity, while the rush to providing 300,000sqm of additional commercial space may lead to over capacity.”

He added some particular concerns of over-subscription in luxury development: “The market should be rebalanced.  Right now the rush is to provide high-end accommodation but the value of such construction should be spread across varying segments to accommodate eventual variations of demand.”

Whilst District 2 and Binh Thanh, he concluded, can provide valuations of up to $2000/1sqm which hold up, developments in Thu Duc and District 9 should be focused on sub-$100k/unit offerings.

What do you think?  Let us know in the comments below

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Riverside and luxury Vinhomes Central Park apartments of Vingroup developer are open to sell The Park building in this September! Register now to have the best apartment!

The Vietnamese property market is making genuine progress following stagnation issues which culminated in 2014.  The progress may be skewed, however, by speculators stockpiling property in the hope of creating the illusion of limited capacity in some developments.  Collusion between suspect agents and developers are being condemned by key real estate associations, who are angry that bad practice by the few is harming the reputations of its members.

The Sun Avenue Apartment (Novaland) in District 2

End-purchase customers are seeing prices jump by as much as 800mVND on a previously unoccupied residence as speculators manipulate the ‘early-bird’ market.

Mr. Tuan Anh, a real estate investment analyst, said: “Developers are keen to get buyers in as early as possible, and openly offer ‘first stage’ prices.  Many of these are snapped up by speculators, sometimes even before the official selling period has begun, with the sole aim of selling the property during the second stage.”

Typical ‘early bird’ prices can begin at around 26mVND per square meter, while secondary offers begin at around 28mVND.  Publically, the public and long-term investors are the intended beneficiaries of preferential early investment, but in reality short-term speculators are reaping the benefits.

“While this kind of speculation is frequent in every market, it’s unfortunate that developers are colluding with it by, firstly, promoting ‘early bird prices’ knowing the supply is more limited than their claims, and secondly, trumpeting early sales as a sign of a projects popularity.  This is an artificial boost to second stage interest, and is quite discomforting.”

Too many brokers

Industry representatives echo this disquiet.  General secretary of the Vietnam Real Estate Association (VNrea), Tran Ngoc Quang, is particularly concerned at the negative impact at a time – following the laws of July 1^st – when efforts to attract overseas investors are showing early signs of success.

“Customers are being faced with a barrage of disreputable agents and bad practice, who are inundating enquirers – here and overseas – with repeated pleas to invest in property they know to be inflated in value.”

Approaches by text message are becoming a real cause for concern.  One unhappy recipient, Mr Viet Dung of Hanoi, reports receiving “many messages from strange numbers at all hours of the day, even after midnight.  It’s so persistent, and impacting my sleep, making me feel terrible.”

Electronic inboxes are flooded with equal frequency.  Ms Thuy Hang, also of Hanoi, receives “on a regular basis 15 new messages each time I check my email, many of which offer adjoining or identical properties for varying prices.  It really distorts any interest I had in the first place.”

One developer, who wishes to remain anonymous, distanced himself from such practices while acknowledging their impact:

“Value is high when demand is high.  This kind of practice doesn’t generate demand for the market as a whole, and so disappoints us greatly. The problem is with individual brokers.  For them, it works: they can send thousands of messages to unsuspecting would-be customers, and if they generate even 1 or 2 sales, they’re very happy.”

High brokerage costs

The overall effect is disorientating for would-be buyers.  One such potential homeowner, Mr Tuan of Tay Son-Dong Da, is feeling pressured and misled:

“Every day, I get calls from brokers with different prices, most of which are ascending.  Over the last 2 months, quotes have increased by as much as 3mVND per square meter.  But it doesn’t take much digging to discover they are pushing apartments which have remained unsold the whole time.  It’s bizarre.”

Estella Heights apartment will be opened to sell second stage in this month

The overall health of the market has been trumpeted recently.  The first 4 months of 2015 saw the Ministry of Construction record 5850 transactions, 2.5 times the same period in 2014.  April alone accounted for 1600 completed sales, a 10% rise on the previous month.

Though sales have genuinely seen an upturn in the last year, one Hanoian expert suggested the numbers were inflated by dubious means. “Distributors and brokers are responding to many queries with ‘sorry, sold out’, to create the impression of high demand and inflate short-term prices.”  He went on to say “It’s a pointless inflation – we know these projects are making a healthy number of sales per day, but the announced figures are often magnified two or three fold.  It’s unsustainable and will hurt their projects in the long run.”

All buyers are being subjected to such tactics, but fears are that foreigners and Viet Kieu (overseas Vietnamese) will bear the brunt as they are unfamiliar with the local market.  All buyers are urged to work with reputable agents who are verifiable by trade associations such as:

Hanoi Real Estate Association
Ho Chi Minh City Real Estate Association
Vietnam Real Estate Association

Keep up to date with advice and information as changes to this emerging market take shape.  If you have any question about Viet Kieu and foreigners buying property in Vietnam, get in touch today.

VietApartment NEWS

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Though the broad legalities sanctioning property sales were brought into force on July 1^st 2015, expected circulars and decrees to offer guidance on their application have yet to be published.  Domestic real estate developers and agents are urging the Government to accelerate publication to negate any market uncertainty.

The Sun Avenue in District 2, hot project of Novaland

Chairman of the Basico Law Company, Luong Thanh Duc, is clear that the new law allows all foreigners and organizations who enter Vietnam legally to buy property if they wish – but detail on regulating some of the finer points is still to be clarified.

Of particular concern is the limitation in the law stipulating foreign ownership may only account for “250 houses or 30% of an apartment block” in any administrative ward.  Mr. Duc is still unclear as to who will “monitor and manage this stipulation, and keep vendors informed about whether that ward can allow the sale.  If parties proceed under this cloud and then the contracts is voided in such a circumstance, how will this be handled?”

Mr. Le Hoang Chau, chairman of Ho Chi Minh Real Estate Association (HoREA), is buoyant about the impact of foreign ownership in his constituency.  He too, however, would like to see questions answered by the government – and sooner rather than later.

Specifically, further detail is needed on definitions of “Viet Kieu”, Overseas Vietnamese who, in the same law, were granted the same property rights as their resident relatives.

“In practice, many Viet Kieu – particularly 2^nd or 3^rd generation – may not have any extensive documentation outlining their heritage.  We’d like the Government to confirm that documentation acquired from the Viet Kieu’s host country is sufficient to enjoy the benefits of the law.”

Regarding the provision limiting sales to foreigners by ward, he said the industry would like to see rational flexibility applied to account for natural migratory demand.

“It’s natural that communities of expats form over time.  We’ve seen many foreigners cluster together in Hanoi, Da Nang, Khanh Hoa, Hai Phong, Binh Duong, Dong Nai, and Thanh Hoa.  In Ho Chi Minh City, foreign demand is highest in Tan Phong Ward, District 7, Thao Dien Ward, District 2.”

Gateway Thao Dien, luxury apartment for foreigner in District 2

Some members of HoREA have also suggested that, to protect domestic supply to local low and middle-income families, restrictions on ownership in these areas are limited to properties starting at VND 21 million/1sqm($1.000/1sqm), although there is little prospect of this being applied.

Mr Nguyen Huu Cuong, chairman of Ha Noi Real Estate Club, agrees that percentage flexibility should be applied.  “In Ha Tinh province there are a lot of foreigners already, so we expect to see big demand in this area which we hope the Government will allow us to meet.”

Exemptions in the law apply to areas controlled by the Defense department, and Mr. Cuong considers extension of this provision be applied to areas in close proximity to key facets of national and civil defense, such as airports, sea ports and other sensitive geographic areas.  These need to be established to allow thorough transparency.

With the legislation being so new, there is little data yet on how property laws surrounding foreigners will complement laws on immigration and residency.  He cites the United States and Canada “which allow foreign ownership but separate this from residency rights.  We’d like more information on the separation of these in Vietnam to best inform buyers.”

In the meantime, enterprises and associations are urging that prospective buyers keep in touch with reliable agents and advisors to stay in touch with expected developments.

Want more information about buying property in Vietnam?  Need to know more about your legal right to purchase as a foreigner?  Then get in touch today.

VietApartment NEWS

dollar now buying more dong

Turmoil in the Chinese markets has seen the Yuan devalued twice in recent weeks, and Vietnam has reacted quickly to protect its export values.  The State Bank of Vietnam amended the interbank rate between the US Dollar and the Vietnam Dong on August 19th, meaning $1 is now worth 21,890VND, an increase of 1%, while enhancing the exchange rate bandwidth from +/-2% to +/-3%.

5% increase in USD value

This action follows similar moves in January and May of 2015, cumulatively increasing the value of the dollar around 5% over this period.

According to the president of one of Vietnam’s most prestigious real estate companies, the impact is likely to be felt in the property market over both the short-term and long-term.  Mr. Phan Xuan Can of SohoVietnam said:

“These changes will almost certainly result in shifting investment priorities, from currency to assets.  While some will continue to favor purchases of USD and Gold, land and property will attract those looking to accrue dependable value as currency fluctuations impact savings and related interest mechanisms.”

Experts predict the ongoing devaluation of VND will increase still further the influx of remittances from Overseas Vietnamese (known as Viet Kieu).  Estimates of annual transfers into Vietnam from Viet Kieu range from $11-12billion, with around 18% (around $2billion) thought to be immediately directed into property in the names of relatives.

The Sun Avenue apartment, hot project of Novaland in District 2

With currency market fluctuations favoring holders of USD coinciding with new housing legislation, allowing Viet Kieu to buy in their own names as well as property purchases by foreigners, Vietnam is poised for significant stimulus by foreign capital.

No overheating

However, experts don’t expect this stimulus to translate into an inflationary property bubble:

“There is still a substantial amount of unsold inventory,” said Phan Xuan Can.  “it’s still very much a buyers in market, particularly in the luxury housing sector with many condominiums, villas, town houses and ocean villas nearing completion or recently finished.”

Vinhomes Central Park will be finished in 2017

The primary impact on speculators and homeowners of quickly changing cash values will be in lending rates, which could have an indirect effect on property and construction – although baseline costs are unlikely impacted greatly in the short-term.

Most Vietnamese construction materials developers and contracts are locally sourced, meaning foreign currency fluctuations are unlikely to impact their bottom line.  The exception may be developers who source bespoke furniture and materials from abroad, but they are few in number.

Asset valuations are likely to remain stable therefore, with supply and demand being currently well matched and costs already committed.  Mr. Nguyen Huu Cuong, president of Ha Noi Real Estate Club, suggests that developers who seek to boost prices while carrying inventory would be committing “economic suicide”.

So, investment prospects for foreigners and Viet Kieu remain healthy, with the dollar now buying more dong and asset prices being unaffected.

As the market changes, we’ll report on it.  Keep up to date with Vietnamese property market news by commenting your email below or subscribe our newsletters.

VietApartment NEWS

Besides, for those who have permanent address, confirmation for temporary residence, or stable work in District 1 could have 1% more in price discount.

We also give The Sun Avenue Apartment buyers from North 1% contract value, included roundtrip airfare ticket for sightseeing project.

The Sun Avenue Apartment from Novaland developer in District 2–  very hot project at the moment

The Sun Avenue Project has 500m frontage stretching on Mai Chi Tho Street, located in Thu Thiem area, District 2, HCMC (where Sala Premium Residence is in). The architecture partner of Novaland and Junglim Company group has collaborated to complete the design outline for complex apartment, commercial, The Sun Avenue service in a green space, ventilation, suitable for both residential and business needs of residents.

With modern design ideas, The Sun Avenue Apartment is so much harmonizing for the new Thu Thiem urban area. The Sun Avenue apartment are clearly divided into functional areas. So that accommodation will separate, ventilated and vision is not restricted by buildings and allow every resident can see the Saigon River.

The building stretches over 500m straight line along the front part of trade under the podium and the dome with advanced technology will be linked to form an inter-trade zones. This formed a food court, entertainment, bustling shopping modeled Clarke Quay area of Singapore. Residents here can be both homeowners and commercial owner for business or for rent.

In addition, within the framework of a special program “The first 100 apartments welcome Overseas and foreigners” by the Group Novaland deployed, customers are overseas Vietnamese and foreigners to buy apartments The Sun Avenue was offered a lease commitments package 8% of the contract value in the first year, gift package management services in interior finishing stage and return air tickets to visit the project. Besides, there have committed to complete the purchase price plus interest incurred if within one month from the time the customer has not satisfied the product.

READ MORE>>

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