More investments back property market recovery

HCMC – The year 2015 saw a sustained recovery of the property market, supported by more investments by local and foreign enterprises and a strong rise in successful transactions.

According to the Business Registration Agency under the Ministry of Planning and Investment, the property market has steadily recovered, thus attracting more investors.

The agency said startups last year rose by 26.6% to nearly 95,000 but the number of newly established enterprises in the property sector surged 86.2%. Fewer realty firms were dissolved or suspended than in 2014.

Property investments made up nearly US$2.4 billion out of US$22.76 billion in total foreign direct investment registered for projects in Vietnam for all of 2015. Foreign firms invested in the local property sector by buying stakes at real estate enterprises, contributing capital directly and lending to projects in the sector.

HCMC attracted around US$1.3 billion, more than half of FDI capital poured into Vietnam’s property market.

The 2015 report of the HCMC Real Estate Association (HoREA) said the HCMC market continued recovering in segments like housing, office for lease, industrial property and commercial property last year.

According to HoREA, last year saw over 26,000 housing transactions done, 1.5 times higher than in the previous year. Housing prices picked up 5-6%, with low-end apartments posting the smallest price rise of only 2%, medium-end ones up 5%, upper-medium ones up 5-8% and high-end ones up 5-15%.

HoREA said there were a number of growth drivers for the property market. Many commercial banks joined hands with property developers to provide capital for enterprises and lend to home buyers.

In HCMC, last year’s property credit reached some VND140 trillion, accounting for 12.3% of total outstanding loans. In addition, 21.6% of US$5.5 billion remittances in the city went to the property sector.

Chairman of HoREA Le Hoang Chau said the property market started to recover in late 2013.

HoREA’s review report pointed out the number of secondary investors in HCMC’s property market inched up three times against 2014. This reflected the improving market but also risk of instability.

Secondary investors mostly buy and sell high-end homes to earn profit thanks to price differentials and currently make up 15% of home buyers in the city.

According to HoREA, secondary investors often take out high-interest loans accounting for up to 70-80% of a home’s value.

In the land lot segment, secondary investors account for 30-40% of buyers.

Source: The Saigon Times.