The quick increase in housing supply and liquidity difficulties have forced many investors to reduce apartment selling prices and change from high grade into middle and low class segments in Ho Chi Minh City.
|Many housing projects have been offered for sale at lower than expected prices (Photo: SGGP)|
After a period of hot growth return, the real estate market has met with lot of difficulties for recent months.
At a ceremony offering 250 apartments for sale at Viva Riverside project in Vo Van Kiet boulevard, District 6, Viet Real Estate Commercial Joint Stock Company declared a 20 percent price cut compared to the previous opening for sale of the project.
The price was reduced to VND21 million (US$945) per s.q meter from VND28 million ($1,260). Besides, customers have also been provided with a slew of promotional programs.
The company said that it will change into mid segment instead of focusing on high class products as they have been.
Director general of the company Nguyen Thi Phuoc said that price cut did not mean quality or facility reduction but sale policy restructuring to suit customers’ demand. For instance, they sell apartments without interior decoration leaving it for customers to do in accordance with their financial ability and liking.
Similarly, the investor of Lucky Palace in the same district has lowered apartment price to VND 21 million from VND34 million ($1,530) per s.q meter. The price reduction has been conducted via promotional programs.
Deputy chairman of a big real estate developer in HCMC said that if they did not reduce the prices, purchasing power would shrink and they would be unable to compete with neighboring investors. Therefore, many had chosen price cut to avoid future risks from cost increase and market fluctuations.
Some investors have transferred into building apartments for middle income people. These products have been well sold.
The price cut showed investors’ difficulties forcing them to rationalize their selling prices, said Mr. Ngo Quang Phuc, deputy director general of Him Lam real estate company.
Mr. Le Hoang Chau, director of the HCMC Real Estate Association, forecast that property firms will continue facing difficulties next year when the credit tightening policy takes effect.
Hence, he suggested them to pay attention to middle segment providing small and medium apartments which are affordable for most citizens.