Southern Real Estate Market: Efforts to overcome difficulties

Signs of recovery

Since the beginning of 2023, the real estate market across the country has faced many difficulties as the State Bank tightened credit room, restricted lending to real estate and increased lending interest rates. Authorities have reviewed and inspected projects with incomplete legal documents, slow project procedures... causing many investors and businesses to suffer because the market has plummeted.

In the first six months of 2023, data from CBRE shows that the supply of apartments for sale in Ho Chi Minh City continued to decline with just over 4,100 units, down more than 70% compared to the same period last year.

The majority of new apartments for sale come from the next phase of projects that were launched in the previous phase, accounting for 65% of the total new supply in the first 6 months of the year. In the second quarter of 2023 alone, no new projects were launched for sale.

On the other hand, the mid-range apartment segment has seen a slight improvement, with more than 1,200 new apartments being launched in the first 6 months of 2023, up 9% over the same period last year. The East continues to be the place with the most new apartment supply, with more than 80% of the new supply coming from Thu Duc City.

Although the real estate market is facing many difficulties, many investors are still at the forefront of construction and commitment to customers.

Therefore, most of the successful transactions recorded in the second quarter of 2023 came from apartments offered for sale in previous phases.

In terms of demand, it can be said that the demand for apartments in Ho Chi Minh City is still very high. In fact, at the present time, the first issue that buyers are most concerned about is the appropriate price, followed by the legality of the project. Projects, despite applying many policies to extend progress but without appropriate price adjustments, still face difficulties in product liquidity.

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA) said, “Although the real estate market in the South is facing many difficulties, the government's policies are gradually changing to suit the current situation. Interest rates have decreased, market liquidity in Ho Chi Minh City and neighboring provinces is returning, showing signs of a warming market.”

Defining business strategy and problems

Although since the beginning of 2023, the real estate market has had a dark color with many unexpected fluctuations. It can be seen that the difficult picture appears everywhere from investors, small-medium enterprises to corporations.

However, despite facing many difficulties, businesses believe that this is also a challenge, a market screening for businesses themselves. Overcoming the difficult period will be a golden opportunity. Many solutions have been proposed to adapt to the times.

The Southern real estate market in general and the markets of Ho Chi Minh City, Binh Duong , Dong Nai… are still bright spots attracting investors.

Accordingly, in order to stimulate market demand, many investors tend to wait for the market to open, so they delay new sales throughout April and May. New sales moves and events before the official opening all fall in the period between the end of June 2023.

In addition, instead of concentrated sales, some investors only open new sales in small quantities and consult customers individually. The reason is that investors are still hesitant about the poor absorption rate of the market from the previous period, although the projects are still being accelerated in construction.

Mr. Ngo Quang Phuc, General Director of Phu Dong Group said, “Looking at the current market, there are many difficulties, but this is an opportunity for each business to look back at its own internal situation. Instead of developing too rapidly as before, businesses will be more meticulous, focusing on the legal aspects of the project to complete it firmly before considering the business plan. A project with completed legal aspects will help increase the investor's reputation with customers, thereby the sales results will also be good because investors will have their own choices.”

Real estate investors in the coming time will lean towards projects with complete legal documents.

“For Phu Dong Group, over the years, we have always focused on completing legal procedures and then on sales. Although the market is difficult, Phu Dong Group always fulfills its commitment to customers by focusing all resources on project construction and delivering houses on time to customers. This is also the company's strategy during the gloomy housing market period,” Mr. Phuc shared.

According to PV's research, currently, in order to attract customers, in addition to product discounts of 5-10%, investors also offer many payment methods, for example, customers can choose: pay according to construction progress (when building a new floor, customers pay 10-15% of the apartment value) or customers pay 20% of the apartment value, the remaining amount will be guaranteed by the bank within 15-20 years, customers will pay the principal + interest of more than 10 million VND to the bank every month.

Notably, with the above plan, the company is also flexible in offering a new payment method that does not depend on bank loans. Specifically, customers pay 20% of the apartment value in advance, then sign a sales contract and pay 0.5% of the contract value each month (about 14 million VND) until the apartment is handed over and the remaining % of the product value will be paid.

Mr. Le Dinh Lang, Director of Song Long Real Estate Investment, Construction and Development Company Limited, shared, “The real estate market has faced many difficulties in recent times, including poor market liquidity and unused financial leverage, which has made investors no longer interested in real estate. Investors and businesses face many difficulties, but in danger there is opportunity.”

“ The economy always has cycles and so does the real estate market. The rapid development has pushed real estate prices to a high level, making it impossible for many people to buy houses and land. This difficult time will help businesses rebalance their business strategies, bringing products to the market at reasonable prices. Small businesses will also no longer chase after selling projects that are not yet legal… focusing on the secondary market, real value for consumers in need,” said Mr. Lang.

Sales policies and real products still attract investors during this period.

Commenting on the market outlook for the end of 2023, Ms. Duong Thuy Dung, CEO of CBRE Vietnam, said that “Liquidity in the Ho Chi Minh City apartment market will be abundant. By the end of 2023, it is expected that many banks will begin to reduce lending interest rates as the pressure on capital costs from banks has somewhat cooled down.

In addition, a series of positive market signals will take place in the last months of the year, typically the acceleration of public investment disbursement (such as the completion of Metro Line 1, the expected site clearance for Metro Line 2, the commencement of component projects of key belt routes in Ho Chi Minh City area...) along with efforts to remove legal obstacles for a series of real estate projects, the last months of 2023 will be the premise stage, greatly impacting the recovery of the real estate market in Ho Chi Minh City and the Southern provinces in 2024.".

Source: https://www.nguoiduatin.vn/thi-truong-bat-dong-san-phia-nam-no-luc-vuot-kho-a631233.html