Vietnam’s real estate market to witness big assignment deals
08-05-2012
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Soho Vietnam, a real estate consultancy firm is conducting negotiations with its partners to promote some assignment deals. Soho Vietnam’s President Phan Xuan Can said he has in his hand the list of 10 investors, who have ordered to buy some projects, committing to disburse 30-500 billion dong in cash.
Can has revealed that some of the affairs would be wrapped up right in the second quarter of 2012.
There are three different groups of buyers. The first group includes the long term investors, who previously did business in other fields but now want to jump into the real estate sector when they see the real estate projects’ prices are getting attractive.
The second group of buyers includes the enterprises, which have to lease business premises for their head offices and storehouses, and now want to own land plots of their own.
The third group is the real estate investors, who luckily sold out their products in 2009-2010, at the very beginning of the real estate market crisis, and now return to the market to seek business opportunities when the property prices drop to the deepest low.
According to Can, the real estate assignment market has been very bustling recently. It is estimated that 80 projects are offered for sale, but only 15 percent of the projects can be assigned. Most of the projects are located in the central districts of Hoan Kiem and Ba Dinh, and the suburb district of Tu Liem.
“There are some big affairs worth tens of millions of dollars, on which clients have left a deposit,” Can said.
Phan Thanh Mai, Secretary General of the Vietnam Real Estate Association, also said that the merger and acquisition (M&A) market heated up in the first and early second quarter of the year.
Mai said that he can see the growing tendency of transferring real estate projects nowadays, since real estate developers are now under the a hard pressure. They have to borrow 70-80 percent of the total investment capital needed for projects from banks. Meanwhile, bank loan interest rates have been staying firmly high, thus making the financial costs unbearably high for them.
Especially, the new real estate developers, who joined the real estate market 3-5 years ago, have been facing big difficulties. When they began doing business, the market was very hot, but it later cooled down and got frozen, thus making their products unsalable and unable to recover investment capital.
As for the projects which are still under implementation, but lacking capital to continue, investors would rather sell products at low prices to get money back.
“Once the prices of real estate projects decrease to reasonable levels, there would always be the investors who consider buying the projects,” Can said.
“They would consider if the projects can meet the requirements of the market in short term (2-3 years) or long term (5-7 years). And these would be the golden chance for the new investors to jump into the property market at lower opportunity cost,” he added.
“It is now also the right time for the investors who have poured big money into the projects to finish half-done projects and start a new investment cycle,” he concluded.
However, some analysts have noted that in thoughts of many investors, selling properties now mean admitting failure. Therefore, they do not feel convenient when contacting investment funds or brokers.
