Apartments selling well, but don’t signal market’s recovery
The fact that products of some real estate projects have been going like hot cakes since the beginning of the year has sparked the hope of the strong recovery of the market in 2009. However, some analysts say that it is still too early to forecast a recovery.
A nice surprise
On January 10, 2009, Phu My Hung Joint Venture Company launched 133 apartments from the first phase of the Riverside Residence project onto the market. 500 clients went to the company’s head office to draw for the right to buy the 133 apartments, priced at VND35mil/sq m. Just several hours after the apartments were offered, all had found buyers.
The fact that 133 apartments could be sold within one morning was a strange thing in the real estate market, as it remains gloomy with very few buyers.
Moreover, the payment method set by the seller is unattractive. Clients had to pay a security of VND100mil for every apartment, then pay 10% of the apartments’ value within three days after paying the security money, and another 10% within the next 45 days. After that, they have to pay money in four installments (one installment every two months and 5% each time). The next five payment installments come every two months, with buyers having to pay 6% each time. In the last stage, they have to pay 30% and VAT.
Nevertheless, analysts say that the good sale of Phu My Hung’s apartments is just one particular phenomenon and doesn’t reflect the real situation of the market.
The analysts have attributed the ‘Phu My Hung phenomenon’ to the big advantages the joint venture has. Phu My Hung has the right to develop a new urban area which has been systematically well-programmed, which makes its products have high liquidity.
Moreover, Phu My Hung’s clients can get support from many commercial banks. According to the joint venture, it has cooperated with 12 banks in a programme to provide 20-year loans to clients to fund their purchases of Riverside Residence apartments.
Policies will decide market performance
Experts, on one hand, say that they can see factors for the market’s recovery, as prices have become affordable for many people, and commercial banks have resumed consumer credit; on the other hand, they say cautiously that the market’s performance will also depend on policies.
2009 is the first year the Personal Income Tax Law will be implemented. Therefore, experts believe that investors will maintain a wait-and-see attitude rather than join the market immediately.
In 2009, the Ministry of Finance will preside over the compilation of six bills which will impact the real estate market, including the bills on public debt management, amended state budget, resources tax, real estate tax.
Analysts say that they cannot see any possibility of the market recovering owing to impacts of foreign capital.
