A race to launch apartments

After launching some 670 apartments of the Riverside Residence in four phases since early this year, Phu My Hung Corporation will start marketing another condo project on July 12, launching some 290 apartments of the project named Riverpark Residence on Nguyen Duc Canh Street in HCMC’s District 7. The luxury condo project is expected to woo homebuyers with green view living space in the third quarter.

Phu My Hung is one of the property companies that launched thousands of apartments to the market in the first half of the year. Thus, after a long period of hibernation, the local property market has witnessed project developers in turn launching their products in different segments to gauge market demand.

For example, Him Lam Land Co. this month started selling 85 units of the 314-apartment Him Lam Riverside project in the new urban town in HCMC’s District 7. The company woos homebuyers with apartment prices starting from VND27.3 million per square meter. The project developer told Tuoi Tre newspaper last week that such prices were soft compared with initial prices that could reach VND40 million per square meter.

In another project, HAGL Land, a member of Hoang Anh Gia Lai Group, is preparing to inject the property market with 1,000 apartments of its luxury condo project HAGL-An Tien located on Le Van Luong Street in Nha Be District in HCMC. The developer in mid-June inked a deal with An Binh Real Estate Joint Stock Company (ABLand) to sell around 100 apartments of its Hoang Anh Riverview project in HCMC’s District 2 at VND25.2 million per square meter.

Meanwhile, developers who target the medium and low cost segments are not sitting on their hands to let their peers occupy the market. Some have started to take their share of the market with products tailored to the average homebuyer.

Dat Xanh Real Estate Service and Construction Corporation late last month started selling 100 apartments of its 624-unit condominium project named Babylon Residence in Tam Phu Ward in HCMC’s Thu Duc District, with prices starting from VND14.5 million per square meter.

Also late last month, Tan Binh Investment and Construction Corporation launched 100 of 750 apartments of its Tan Mai project, which is under construction in the outlying district of Binh Tan in HCMC. The company is attracting homebuyers with prices starting at VND12 million per square meter, or VND500 million to VND800 million per unit.

Some experts have anticipated good competition among developers given the volume of products launched at the same time. They reckon that some developers have held back their products and that it is high time for them to release their stock ahead of a possible investment movement from stock market winners.

Financial attraction

Gone are the days when buyers have to elbow each other to make a deposit on an apartment. To make the market move, most developers are enticing homebuyers with financial support, even offering promotions.

Phu My Hung is encouraging potential investors with financial support from tens of banks as they buy apartments of the new condo project Riverpark Residence. The banks include Vietcombank, An Binh Bank, Indovina Bank, Eximbank, Sacombank and Agribank, to name just a few.

Besides loan terms up to 20 years, some banks offer loans worth 80% to 90% of the value of an apartment. For example, An Binh Commercial Bank, or ABBank, has announced to offer loans up to 90% of a facilities’ total value for customers who buy apartments of the Hoang Anh Riverview project that it represents as a distributor.

Meanwhile, to draw attention from buyers, Dat Xanh Co. has teamed up with Dat Gia Housing Development Consulting Co. to launch a promotion called ‘buy apartment, get apartment’, in which the companies will offer homebuyers an apartment worth VND1.8 billion of the Babylon Residence project via a lucky draw.

Some other developers use the down payment as an incentive. For example, the luxury condo project The Estella in District 2, which is being developed by Singapore-based Keppel Land, requires a deposit of only 20% of the total value of an apartment. The remaining 80% is due by 2012.

… and waiting for market response

Abundant supply plus financial support has given the property market a rosier look than the gray it has shown for so long. However, the market now leans toward buyers, far more so than in the exuberant market of 2007.

Bui Tien Thang, deputy general director of Sacomreal, was quoted by Lao Dong newspaper last week as saying that the recent happenings in the property market were just like the scenario in late 2007 when the stock market rose followed by the real estate market.

Most ‘property surfing’ investors, who make money from short term investments that local media often call ‘surfing’ to imply that profit margins move like waves, are trying to make the market move.

The property market is showing fewer waves for them to surf as developers launch products at lower prices. That means narrow profit margins while supply is on the rise.

According to Savills Vietnam, a property market research and services company, there will be another 5,000 new units next year, 15,000 by the end of 2011 and over 20,000 by the end of 2012.