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Apartment developers wring buyers in rash dash for profit


Developers have taken advantage of the feeble property market recovery to immediately raise prices

On March 15, the Hoa Binh Group - developer of the Hoa Binh Green City project in Hanoi - suspended sales in order to adjust prices. Nguyen Huu Duong, general director, said prices would rise by at least 10 per cent, from current VND20.5 million ($976) per square metre of bare-shell apartments.

“The prices at Hoa Binh Green City have been held back and are well below our high level of quality and peace-of-mind. Compared to projects of a similar scale and quality, we invested 25 per cent more to ensure these things,” Duong said. Another reason Duong is confident is the high speed of construction. It is now 70 per cent complete and aims to begin handing over finished units in June this year.

Hoa Binh Green City is not alone in increasing prices. Thang Long Number One, in the west of Hanoi, put them up 9 per cent compared to those quoted in November 2013.

Another Hanoi project, Golden West is also expected to increase its prices by 7 per cent in the coming time.

“The gap [between the old and new price] will recapitalise developers after a long period of little to no returns on their investments,” said Vu Cuong Quyet, general director of Dat Xanh North Joint Stock Company. But Quyet warned that projects planning to increase prices should be on-schedule and of good quality.

Apart from that, these projects seem to be nearly finished and customers are preparing to receive their apartments. “This schedule seems to have convinced customers,” he added.

Nguyen Quoc Khanh, chairman of G5 Real Estate Alliance, said increasing prices were a sign of a warming market but that it was not out of the woods yet. He advised developers to consider raising prices very carefully before making a decision, lest they lose potential clients.

In several other projects in Hanoi liquidity has remarkably increased recently with some speculative investors selling apartments still on paper for profits of VND100 to VND200 million ($4,760 to $9,520), a level rare seen for many years.

According to the Hanoi Construction Department, the apartment price index for the fourth quarter of 2013 for nearly all districts in Hanoi had increased by up to 3 per cent.

Additionally, the number of high quality apartment projects in the inner city still under construction was few. Those projects range in price from around VND30 to VND40 million ($1,428 to $1,900) per square metre.

Sales of high-end apartments in Hanoi have picked up considerably in recent months after a few years in dormancy. Thang Long Number One, for instance, have sold 90 per cent of 970 units compared to just 40 per cent sold a year ago. Cen Group recently sold nearly 50 apartments at StarCity Le Van Luong for average $1,600 per square metre of bare-shell units.


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