The villa and townhouse market in Ha Noi has stagnated over the last two months, industry insiders said this week.

"At the moment, the number of transactions on villas and townhouses is down by 20 per cent compared to two months ago. Also, the number of investors looking for new property has declined by 50 per cent," said Le Xuan Truong, managing director of the website www.batdongsan.com.vn.

Meanwhile, Ngo The Vinh, the director of Vinh Gia Construction Investment JSC, said his company had yet to complete a single residential agreement in the last month.

Pham Thanh Hung, deputy director of the Century Group, said prices of villas, particularly in the west of the city, had remained unchanged in recent weeks.

Retail website www.batdongsan.com.vn said that accommodation in Ciputra and My Dinh now costs in the region of VND90 million (US$4,700) to VND140 million ($7,300) per square metre.

In more modest regions – such as Phap Van, Linh Dam, Van Khe and Van Phu – accommodation is going for between VND40 million ($2,100) to VND60 million ($3,100) per square metre.

"Prices climbed in May. Now, it's time for the market to re-stabilise so that it is unchanged or slightly decreased," Truong said.

"Sellers don't want to sell and buyers do not want to buy so the market is gloomy," Truong said.

Nevertheless, traders still believe it is an investors' market.

"The market is now in a bad situation. It cannot get worse. Buyers and sellers will not wait. I think they will soon pour money into real estate when they get a chance," Truong said.

According to a report by UK-based Savills, in the medium-term, 59 new villa and townhouse projects will launch in Ha Noi. Most of them will be in Hoang Mai, Lang Hoa Lac, Ha Dong, Long Bien and Tu Liem districts. It is estimated that 55 per cent of these will be in Hoang Mai District and Lang Hoa Lac area.

Savills said there were almost 8,200 villas and 11,400 townhouses in the capital. Ha Dong is the most attractive area for investors, with about 3,400 villas and 5,000 townhouses under construction.

* Speculators plague market

According to a report released by the Viet Nam Report Company, only 38 per cent of customers that purchase real estate in Ha Noi for residential purposes and 62 per cent are investors.

The report claimed that 48 per cent of the investors purchase properties to make fast profits, while the remaining 52 per cent are more interested in the real estate's long-term potential.

The document states that 44 per cent of real estate investors use their own personal funds to finance their purchases and about 35 per cent of investors rely on loans from their friends and relatives. Only 20 per cent of investors admitted to having borrowed money from banks to invest in the industry.

Specialists from the company also forecast that the capital estate market would be stable during the second half of the year.

"Accordingly, land price ‘fever' would not have the opportunity to occur during this period," said the company's vice chairman Phung Hoang Co.

He added that capital invested in the estate market for speculation purposes would shift from Ha Noi to other potential markets that would yield higher short-term profits.

Estate prices, therefore would remain the same or slightly deflate later this year.

The report forecasts that apartment transactions would be more eventful during the last six months of the year.

Apartments for average income earners are currently attractive to investors. The report said that estates in Tu Liem and Ha Dong districts have also brought big profits to investors.

About 500 consumers and investorswere surveyed in the capital's six districts, plus experts interviewed, for the report.

* Suburban flats gain popularity in HCM City

Many luxury apartment buildings in outer-city districts have attracted investors and buyers in recent months because of affordable prices and attractive loans from banks, according to real estate companies.

Banks have been offering attractive mortgage terms to buyers.

Under these contracts, buyers pay only 30 per cent of the apartment value in advance, with the remainder paid over 20-25 years.

Dat Xanh Real Estate Co, one of the pioneers in building residential areas in outer-city districts, said the company had completed several apartment buildings, including the Phu Gia Hung in Go Vap District and Sunview in Thu Duc District.

A large number of customers have either bought apartments or shown interest in future purchase.

Luong Tri Thin, general director of Dat Xanh Co said the price was between VND13 million-17 million (US$684-894) per sq.m.

An apartment with an area of 52-100sq.m sells for around VND1 billion ($52,631), a price that is affordable for middle-income households.

Another company, Khang Nam Real Estate Investment Joint-Stock Co, an investor in the Terra Rosa project in Binh Chanh District, said it was beginning to use special designs and apply advanced technology to shorten the construction process and reduce costs, in an attempt to lower apartment prices.

Le Thi Tram Anh, general director of Khang Nam Co said it had completed phase 1 of the Terra Rosa project with investment capital of about VND500 billion ($26.3 million), consisting of 366 apartments.

Source: VietNamNet/VNS