Many property companies are struggling to survive from the difficult times this year as the government tightened lending growth rate of loans on real estate.
|The property market this year is deep in difficult times due to the government’s tight monetary policy (Photo:Minh Tri)|
The property market in 2011 is not an attractive investment class due to abundant supplies, weak buying and low liquidity, said Nguyen Do Viet, deputy general director of property firm Song Da Thang Long.
Viet also expected that investors opted for gold and the US dollar this year. “Strong cash flows keep run into the two investment classes. High saving rates also encourage people to deposit their money into banks,” he said.
Experts said the market trend still relied strongly in bank loans. Market research firm Vietnam Report said in its latest report that 45 percent of people who want to buy houses planned to borrow from banks.
Vu Dinh Anh, Deputy Head of the Price and Market Research Institute, an arm of the Ministry of Finance, said an amount of around US$5 billion, which is bank loan, will be withdrawn from the real estate market this year as the government targeted to reduce loans on property to 16 percent from 23 percent.
Anh expected that the State Bank of Vietnam will also withdraw around VND400 trillion ($20 billion) from the market. “It shows that the yearend will be the most difficult time for the property market,” he said.
“Property firms and investors should not expect the government to use any bailout package to boost the market. It will hardly happen this year,” said Professor. Dr. Dang Hung Vo, Former Deputy Minister of Natural Resources and Environment.
Change to survive
Efforts to survive from the difficult times have seen many property firms have to reconsider their business plans.
Lam Van Chuc, general director of the property firm Phuc Duc, said the company canceled plans on apartment buildings and switched to common houses, which cost less and can be sold easily.
Tran Van Thanh, chairman if Nha Viet Nam Joint Stock Company, said the firm decided to invest in villa projects, instead of apartments, which require huge amounts of capital and have low rate of return.
Mathew Powell, director of property market consultancy Savills Hanoi, noticed small investors should perform a careful study to assess construction projects before making any decision, learning on construction quality, designs and location.
However, some experts said there were still lights at the end of the tunnel. “Lands are always a safe investment class, with high liquidity. Two-bedroom apartments with the average area of 80 square meters and the price of VND30 million per square meter are also one of investors’ top picks,” said Phan Thanh Mai Head of Vietnam Network for Real Estate Transaction Centers.
He added the property market in Hanoi remains very bullish now thanks to the high housing demand.
Many experts worry that the property will likely to collapse if the government’s policies are too tight.
“The property market is one of the most important parts of the economy, so it should get preferential policies similar to other sectors,” said the Price and Market Research Institute’s Anh.