Market gets more affordable homes

The residential market is on the way back to where it should be as there are an increasing number of affordable condo projects having joined the market to serve a majority of homebuyers while luxury ones target a smaller market segment of well-to-do buyers.

The market trend has moved up strongly since early this year, and the affordable home segment is expected to continue to dominate the market in the coming time, according to market observers.

Savills Vietnam has released a quarterly market research report saying market demand picked up in the third quarter of the year as it witnessed the highest number of apartments absorbed in the primary market at around 4,400 units, equivalent to the total absorption over the first six months of this year. The majority of these units were affordable apartments, accounting for some 80%.

In the past three months, the market has recorded average primary prices offered at US$2,041 per square meter for high-end apartments, US$1,550 for mid-end ones and US$773 for affordable ones.

According to Savills, the total primary supply of apartments in HCMC in the year to date has increased to a record of 16,600 apartments, nearly triple the same period last year. Twenty new projects with 7,200 apartments entered the market in the third quarter of this year, a strong supply compared not only to the previous quarter at 3,200 units and the first quarter at 2,900 units but also to the same period last year at 3,500 units.

CB Richard Ellis Vietnam (CBRE) has the same market review, saying the largest growing segment of the market is affordable homes as seen previously. Among the projects launched in the third quarter, none of them were in districts 1, 2, 3, or 7, thus reflecting the scarcity of reasonably priced land in these districts.

When asked about the trend towards the affordable home segment, Rudolf Hever, associate director of research and consulting for CBRE, says that as the local economy continues to grow, and incomes increase, there is pent-up demand from people who were previously priced out of the market.

Hever notes there has been a lot of action from the Government to support the residential property market, including measures to increase transparency and increase the availability of loans.

“All these efforts work together encouraging prospective home buyers to look at new and existing developments as a realistic option, and as these affordable projects achieve critical mass, the availability of facilities and amenities in these areas will increase too,” he comments.

Although the market moves toward the affordable segment, it has seen some high-end projects launched into the market, and some have made events to stir up the market. For example, the City Garden project on Ngo Tat To Street in HCMC’s Binh Thanh District was officially launched after a year of preparation for the project’s foundation construction. The project includes six blocks of 21 to 30 floors, with 927 apartments from one to three bedrooms, and penthouses.

The company hosted a launching event late last week, inviting some 450 guests to show its sales program for the first phase featuring some 450 apartments with prices ranging from US$1,830 to US$2,700 per square meter.

In another project, Binh Thien An Property JSC last week invited some 300 guests to its condo project named Diamond Island Sky Resort in HCMC’s District 2 for the company’s five-year anniversary celebration, as well as for the project construction update, ahead of next sales programs. Some 250 among 700 apartments in the project are offered at US3,500 to US$5,000 per square meter.

Market observers, however, say competition is starting to be felt within the market as luxury and high-end condominium projects closer to the city center are facing competition from villas and townhouses in suburban districts, such as districts 9 and Nha Be. Villas or townhouses in suburban districts can have the same quality to a condominium project closer to the city center, but come with land.

There are 26 projects expected to launch some 10,300 units in the next two quarters, and the market may see an additional 104,000 units entering the market in the next few years, from 2011 to 2013 and beyond, according to Savills.

The company projects a positive demand trend in the HCMC market, fueled by increasing disposable incomes, and growing migration to the city. However, apartment demand is expected to be strong in the smaller-size apartment segment.

Property experts reckon that although the local property market has gone flat since sliding into difficulty two years ago, it still holds potential for developers and investors thanks to the growing population that triggers huge housing demand in big cities like Hanoi and HCMC.

It is estimated that the population will increase to 10 million in Hanoi and 12 million in HCMC by 2030. If the housing standard of 15 square meters per capita is applied, the two cities will need some 160 million square meters of housing to meet for the demand

Hanoi’s sustainable development in limelight

Almost 600 domestic and foreign scientists gathered in Hanoi on Oct. 7 for a three-day international conference, “Sustainable Development of Hanoi Capital - Civilised and Heroic City for Peace”.

At the opening ceremony, Vice Chairwoman of the Hanoi People’s Committee Ngo Thi Thanh Hang said the conference was an importance chance to assess and honour the traditions and civilised values in the glorious history of the capital city and the whole nation.

We should outline orientations and strategies to build Hanoi into a modern, elegant and civilised city, she said.

For his part, Secretary of Hanoi’s Party Committee Pham Quang Nghi pointed out challenges to the capital city that need to be solved such as the fast increase in urban population, traffic jams and environmental pollution.

Meanwhile, planning and planning management have not been well controlled, leading to the degradation or disappearance of the capital’s architectural heritages and unequal development in urban and suburban areas, Nghi said.

There remained shortcomings in the capital city’s economic efficiency and competitiveness while its internal sources and advantages have not been fully tapped, he noted.

The capital’s economic development has failed to match its potential and socio-cultural development has not caught up with the capital’s economic development pace as well as its role and position, he added.

He said the capital city’s authorities considered the conference a chance to listen to scientists’ opinions on the city’s strengths and potential for development. He also hopes participants will put forth proposals on solutions to bring into play the values of Thang Long-Hanoi to build a sustainable development strategy for the city in the context of rapid global change.

At the conference, UNESCO Representative in Vietnam Katherine Muller-Marin cited a recent study that was conducted by PricewaterhouseCoopers and reported in its UK Economic Outlook publication as saying that Hanoi is projected to be one of the world’s top two cities in terms of average real GDP growth for 2008-2025.

In order that the city continue delivering accomplishments such as these, we need to be mindful of the challenges that rapid urbanisation poses, especially when it is about preserving cultural heritage, she said.

“If we wish for sustainable development in the next 10 years, 100 years, and even 1,000 years, we have to preserve the cultural values,” she said.

In his report on “Thang Long-Hanoi: Lasting and Sustainable Development” at the conference, Prof. Dr Vu Minh Giang mentioned four groups of issues that are discussed at the event. They include history and politics; cultural issues; socio-economic issues; and balancing natural resources and environmental conditions with urban management and construction.

A total of 157 reports will be presented at the conference.

Professor, Doctor William S. Logan of Deakin University , Melbourne , Australia , who has studied about Hanoi for 20 years, said Hanoi was one of a few cities in the world having a continuing history of being the capital city of a country for over 1,000 years, which makes it different from many other foreign cities.

Hanoi has to ensure that modern development doesn’t undermine the outstanding universal values if the city wants to maintain its distinctive character as one of the most beautiful and oldest cities in the world.

In his opinion, development and preserving heritages are not opposing issues. As the result, policy makers have to take planning issues into consideration and not destroy the city’s cultural values.

Small-scale condo buildings challenge city’s planning

Just imagine thousands of small private condo buildings – if not many more times that number – are to spring up in the city. And just imagine how the rampant development and the chaotic constructions will spoil the general scenery in HCMC.

That is the highly-probable reality which is a huge challenge for urban planners in the country’s biggest city, as the legal corridor is now opened for owners of land plots of as small as 120 square meters to develop private condo buildings. The legal basis is provided for in Circular 16/2010/TT-BXD, issued by the Ministry of Construction to offer detailed guidelines for implementing Decree 71/2010/ND-CP, and started to take effect last week.

Anyone can build apartments

The circular allows individuals to develop private apartments within existing residential areas in cities around the countries. For the first time, apartments in such mini condo buildings will be granted certificates of ownership and can be transferred like those in large-scale commercial buildings.

For many people, allowing such small-sized apartment development is good news, for it will create chances for them to afford an apartment for their own thanks to the apartments’ low prices. This will also help quench the thirst of housing demand in the society.

However, others feel concern that developing the so-called ‘mini-apartment’ projects in existing residential areas will challenge the city authorities in terms of social management, and even worse, the move will quickly tear down urban planning in a city like HCMC.

The new rules allows families and individual to build an apartment building that has at least two stories, and each story must have two or more apartments measuring from 30 square meters. Those condos have to meet the standard management requirements as specified in the current housing law.

The regulation requires all future private housing buildings that have a total floor area from 1,000 square meters, or from six-story height to have a certificate of construction safety granted by competent management organizations. Once the private housing buildings meet all requirements, which are in fact very simple, they will be offered property ownership certificates for each apartment in the building, and the apartments’ owners are allowed to resell their property to others. Like other commercial condos, the land area on which the private apartment building is developed will be used as common property for every resident living in the building.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, which used to send a petition to develop 20 square meter apartments only to be turned down, comments that the new rules are very interesting and also create a very complicated problem for the city.

“This is interesting because it will bring profits to the society, allowing anyone to develop apartments,” Duc says to the Daily.

Duc says such small-sized apartments will surely be cheaper because developers do not have to spend money on technical and social infrastructure development, nor do they have to pay land use tax as big commercial condo projects do. Moreover, such private buildings often enjoy simple and quick procedures in obtaining a construction permit; sometimes it takes only ten days for a permit granted. Under current construction conditions, it will take only from three to six months to finish such a condo building, meaning the investor will recoup investment quickly and can maximize their profits in a short period of time.

Duc comments that for buyers, the would-be low-cost apartments will meet the demand of the majority of homebuyers who have a meager budget and have no way but live in leased houses or apartments. Thus they can buy those apartments to either meet their accommodation demand or possess a property for their own.

Challenges to management and planning

Seen from the city’s master plan, allowing such private apartment development may lead to chaos in planning, breaking the city planning, says Duc of Dat Lanh Company.

He explains that an existing residential quarter along a small street with hundreds of houses will surely become overloaded if some mini-apartment projects with hundreds of apartments are crammed into the quarter.   

Tran Minh Hoang, board chairman of Vinaland, seconds his colleague’s ideas, saying that giving the green light to such apartment projects will help nothing but pose many challenges to management organizations such as social security and firefighting protection among others.

Hoang says developing such private condos will spoil the city’s relocation plan to develop residential sections in outlying districts. Instead of going out to the outskirts, many will manage to stay in the urban center, accepting to live in a small apartment in return for many conveniences. As a result, the city’s population will face more pressure in the coming time.

In addition, apartment management is a tough problem for private developers, and disputes will arise and are not an easy task to address, even for professional property developers.

In fact, some property developers have recently begun set eye on the ‘fast-food apartment segment’ by selecting some areas in existing residential quarters for their condo development. The advantages of such projects include simpler compensation and site clearance plus the availability of existing infrastructure systems. Meanwhile, developers who risk their investments into big projects have to face prolonged procedure in site clearance and in seeking a license for construction.

With a private apartment, a minimum land area of 120 square meters is enough for a mini-apartment building. An executive officer of a real estate company says he is asking for a license to develop a private apartment project under his own name, not under his company name.

Some property companies, however, show concern whether allowing such 30-square meter apartment development will violate the housing law when those apartments are traded as commercial ones. The current Housing Law requires commercial apartments to be at least from 45 square meters each.

Vietnam builds first pharmaceutical factory in Myanmar

A Vietnamese pharmaceutical company, the ASV Pharma, has built the first Myanmar-Vietnam joint venture pharmaceutical factory in Myanmar, a local weekly said in this week's issue.

The factory was established in Mingaladon industrial park in the commercial city of Yangon with the cooperation of Myanmar Entrepreneurs Integrated Group, the Pyi Myanmar News said.

ASV Pharma, a member of ASV Holdings, opened a booth at the Vietnam Commodities Fair held in Myanmar in early 2010 to introduce its pharmaceutical products.

The establishment, supported by the Bank for Investment and Development of Vietnam (BIDV), was initiated by a working visit to Myanmar by Vietnamese Prime Minister Nguyen Tan Dung in April 2010.

According to official statistics, Vietnam-Myanmar bilateral trade amounted to 82 million U.S. dollars in the fiscal year of 2009-10.

Vietnam stands the 16th among Myanmar's exporting countries. Myanmar mainly exported its forestry products to Vietnam, followed by agricultural produces, seafood and electrical goods, spare parts, while it imported from Vietnam steel, electronic goods, pharmaceuticals, medicines, industrial products, chemical products, computer and accessories, plastic, cosmetics and engine oil.

Meanwhile, Vietnam's investment in Myanmar hit 23.4 million U.S. dollars as of February this year since the country opened to such investment in late 1988.