Stock market fuels property market comeback
Vietnam’s real estate market is set for a revival party, fueled by a flow of cash from the booming stock exchange, industry insiders have said.
Market watchdogs said the local property market showed signs of picking up since the last quarter of 2006, with the number of real estate purchases up by more than 20 percent.
The first days of the Lunar New Year witnessed a dramatic increase in transactions at local property companies.
Vo Dinh Quoc, deputy director of the Ho Chi Minh City-based Asian Commercial Bank’s Real Estate Company said it had finalized a real estate transaction worth VND100 billion (US$6.25 million) on its first working day of the New Year.
In fact, transactions have grown 20 to 25 percent since late last year at ACB real trading centers.
The value of successful deals amounted to from 500 – 700 taels of gold (a tael = 1.2 ounces) per transaction from the previously under 200 taels.
The Phu My Hung Joint-Venture in Saigon South is having difficulty meeting the increasing demand of potential clients, ready to pay in cash to purchase the company’s apartments.
Many other apartment trading companies have experienced a similar situation.
A representative of the Linh Phong Construction, Investment and Development Company said it sold out about 1,500 apartments and houses in residential areas in District 7 to date.
Experts attributed the sharp rise in securities since late 2006 to the increasing demand of people to own a house.
It’s expected that huge cash from stock investors would be pumped into the realty market this year, they said.
Le Hoang Chau, deputy chairman of HCMC Real Estate Association (HoREA), said the relation between the stock exchange and real estate market was improving, brightening the realty business.
He added that the marriage would help investors to uphold capital as many stock investors were also property investors.
Stock investors want to reduce risk by investing their money in different businesses.
The liquidity of property is low, however investment in it still yields more profits than depositing money in a bank.
Marc Townsend, general director of an international real estate firm CB Richard Ellis Vietnam, told a recent seminar that villas and high-end apartments were the main targets of affluent stock investors.
Other factors
The property market is forecast to boom this year with foreign investment flowing, promoted by WTO membership and the US’s approval of normal trade status for Vietnam.
There is growing interest among foreign investors in infrastructure, urban development, housing, and resorts.
Tran The Ngoc, director of the HCMC Department of Natural Resources and Environment said his office received at least one foreign property group a week to learn about the city’s real estate market.
HoREA also revealed that the association had received more than 20 delegations representing major real estate companies from the US, Singapore, Hong Kong, Republic of Korea.
Most were interested property business in busy cities like HCMC and Hanoi.
Additionally, decrees issued by the government to guide implementation of the Investment and Housing Laws had created a relatively transparent legal framework for investors.
The Real Estate Trading Law that took effect early this year contains more liberal provisions to meet the needs of investors.
The government has also allowed overseas Vietnamese to participate in the property market.
Other experts said the saturation in Southeast Asian markets would make Vietnam a lucrative option with its rapid urbanization and demand for housing and offices outstripping supply. |
