Top 10 events in 2008’s real estate market
This is the first time after many years, that the price of real estate market was strongly down after a long hot development.
1. Prices keep dropping
This is the first time after many years, that the price of real estate market was strongly down after a long hot development.
Within three months of the April 2008 application of the Ministry of Construction’s aggressive tax and banks starting credit tightening policies, prices in the real estate market started to drop.
Overall, prices dropped between 20-70 percent. The bursting of the real estate bubble was predicted by experts since the end of 2006.
2. FDI continues pouring into real estate
About 50 per cent of US$64 billion of foreign direct investment (FDI) in the country went towards the real estate market.
While some are concerned about this huge influx of foreign capital, representatives from the Foreign Investment Agency find that worry about FDI going into the real estate market is unfounded.
3. Ha Noi absorbs chunks of adjoining provinces
On May 29, the National Assembly approved resolution on expanding the capital city of Ha Noi.
With the possibility of expansion being discussed a year ago, real estate investors jumped on the chance to buy up cheap land in districts which would become part of the new Ha Noi such as old Ha Tay Province, Luong Son District of Hoa Binh Province and Me Linh District in Vinh Phuc Province.
After the massive investments, land price in these regions strongly increased. However, right after the capital city boundary expanded, real estate prices dropped.
Prime Minister Nguyen Tan Dung on December 1, 2008, decided to transfer the right to assess land price from the financial sector to the natural resources and environment sector.
After the decision, all matters relating to the rights and responsibilities of assessing land price and land documents, as well as land appraisers will be moved to the natural resources and environment sector.
This is considered an important administrative reform, because all documents on land had been already kept by the natural resources and environment sector.
5. Investors tee up for round of golf
Over the past ten years up till 2008, the country only had 13 golf course investment projects. However, the number increased by 10 times last year with 123 golf projects.
Hearing warnings on massive investment in golf courses from experts and mass media, provinces stopped issuing many investment permits for the courses. However, investment in this realm will not stop completely, because it is still considered attractive with more benefits than risks by some.
6. Race to open real estate transaction centres
The domestic real estate market in 2008 witnessed a development paradox. The price of land and houses kept decreasing, but many new real estate transaction centres opened.
The Ministry of Construction appraises that the quality and effectiveness of these centres are not high. In the near future, the ministry will create regulations on the standards for such centres.
7. Buying houses still on the drawing board
Key investors signed contracts to sell apartments and houses even before construction was finished, despite regulations that investors cannot legally mobilise capital when the foundation is unfinished.
This trend is because of the hot real estate market, experts say.
A typical example for this trend is with the Landmark Tower project in Ha Noi, for which investors signed contracts to sell 918 apartments in a building of the project and take $28 million even when the construction of the foundation was not yet finished.
Authorities have many measures to stop this trend, but they are not effective, as there are no major sanctions for misdeeds.
8.Stock investors cool on property shares
Not many real estate companies reached their business targets set in the beginning of the year, so their shares fell into disfavour.
In 2007, the price of shares for real estate companies averaged between US$6-12 each. This price was down to around $2 on average by the middle of the year 2008.
However, experts said this is a good chance for investors to buy up cheap real estate stock and wait for recovery of the real estate market.
9. Real estate brokers sued over falling prices
Some real estate companies in HCM City have strong reactions after CBRE and Vinaland announced that prices of their luxury apartments, including the Cantavil Hoan Cau and Phu My Hung projects, dropped by 52 per cent.
These companies protested the information and announced they would bring the case to court.
10. Landmark Towers inspire aborted bet
The bet started on November 13 when a team of veter
ans and architects sent Keangnam Group a letter. In the letter, they promised to present this group VND100 billion, if the Landmark Tower was completed on time in 2010.
Answering the veterans and architects, the group affirmed that they would be able to finish the project on the 1000th anniversary of the capital city of Ha Noi falls in 2010, saying they were prepared to take on the bet.
However, both sides did not end up signing the bet for various reasons. – VNS
(From Viet Nam News )
