Falling construction costs and low lending interest rates have created favourable conditions for many real estate projects, predicts Richard Leech, Managing Director of CB Richard Ellis Vietnam.
Although the price of luxury, high grade and medium grade projects have fallen by 4 to 8% in the first few months of the year and some projects have seen sharper decreases of 20 to 30% as there has been no sharp increases in supply, CBRE believes that there won't be sharp price decreases.
Even with supply increasing in 2009 and 2010 prices are not likely to take a sharp downturn. Several big projects, including Keangnam Hanoi Landmark Tower, have seen their foundations completed, while the two big office buildings of BIDV and Capital Tower are past the construction phrase and are expected to be ready for operation by the end of the year.
Leasing fees and sale prices have been decreasing significantly, and although the decreases are not good news for everyone they are necessary to help push the market up, according to Leech.
Some sectors are doing well. Mid-range houses have seen prices increase of 5 to 15%. More and more people have been seeking to buy and able to put deposits down to purchase houses.
Leech does not think that the warming of the real estate market is temporary as domestic demand is strong and foreign investment keeps flowing into the real estate sector.
In the context of the global financial crisis Vietnam is considered a safe country. Although its economic growth rate of 3.1% in the first quarter of 2009 is the lowest since 1990 it is still good compared with many others.
Leech said that Vietnam remains an attractive investment destination in Asia as it is a country with a young population and decreasing interest rates and construction costs all help to boost the real estate market.
It is expected that there will be some 20 residential projects with 3,000 apartments launched onto the market this year.
