The real estate market is warming up.

(Baonghean) - 2015 was the year that people and businesses awaited the recovery of the real estate market after a long period of stagnation; this anticipation was not only cyclical, but also because the State's policies had created the legal framework and the best conditions for this key market...

Attractive in the low-price segment.

Ms. Ho Thi Thu, residing in Ngu Loc hamlet, Hung Loc commune (Vinh City), recently borrowed capital from the Quan Hanh branch of HD Bank to buy an apartment. She said: “Thanks to the low-interest loan from the bank and the extended 20-year repayment period, I was able to buy an apartment to live in and even mortgage the apartment itself.” Ms. Thuy, a customer working at the Nghe An Department of Education and Training, also bought a house on installment in the Vinh Tan urban area and received certification from the bank to facilitate the loan application process. Mr. Nguyen Canh Duc, from Hamlet 18, Nghi Phu commune (Vinh City), also purchased a house worth less than 700 million VND and secured a bank loan.

Muong Thanh Group provides many new apartment buildings in Vinh City.

Currently, most investors are working closely with banks to provide loans to customers for real estate purchases. With maximum loan amounts up to 70% of the property value, along with the option to mortgage the property itself and long repayment terms, many customers with genuine housing needs have had the opportunity to buy a home. According to Mr. Tran Van Bac, Director of HD Bank Nghe An Branch, the attractive segment of the market is real estate priced under 1 billion VND. Transactions for this segment remain consistent, especially since the end of 2014, when the market has significantly improved. At HD Bank, the list of individuals borrowing to buy houses is growing, and according to Mr. Tran Van Bac, the loan procedures are simple, customers have excellent repayment schedules, with no overdue debts, and most are buying homes for personal use. The loan amount at HD Bank depends on the project: if the project is completed, a 30% down payment is required, and the bank will lend 70%; if the developer is still building, the customer will pay according to the developer's progress, and the bank will lend 70% of the value paid according to the progress. Besides HD Bank, many other banks such as Vietinbank, Vietcombank, BIDV, and the Agricultural Bank of Vietnam currently offer real estate loans, as well as loans for building and renovating houses. These loans offer long repayment periods with preferential and competitive interest rates, and quick processing times. Repayment methods are flexible: monthly, quarterly, or in installments to suit the customer's gradually increasing future income.

According to data provided by the Vinh City People's Committee's Reception and Results Department, in the fourth quarter of 2014, the city received 787 applications related to real estate transfers. In the first quarter of 2015, the office received and processed 403 real estate transfer applications, including both houses and land. Land auction activities in the city and some localities such as Do Luong and Cua Lo also performed better than the same period. Mr. Nguyen Hoang Minh, Director of the Vinh City Land Fund Development Center, said: In the fourth quarter of 2014, the center auctioned land worth 30 billion VND, and from January to April 2015, the estimated land auction revenue reached approximately 100 billion VND. Land prices have also increased, but the number of customers participating in auctions is also higher than before. In February 2015, the city collected 26.9 billion VND in land use tax. These figures indicate that real estate transactions in the city market are showing signs of gradual recovery.

Businesses that anticipate market trends

To capitalize on the warming market, many real estate investors have overcome difficulties and are determined to invest to seize opportunities. After more than two years of severe difficulties due to the frozen real estate market, Tecco New Technology Application Investment & Construction Joint Stock Company has taken the lead in the market with several apartment projects for low- and middle-income earners in Vinh Tan Urban Area and the C1 building (Vinh City). In Vinh Tan Urban Area, Tecco has invested in two additional apartment blocks, Tan Binh and Tan Phat, providing nearly 400 new apartments to the market. The Tan Binh apartment building was constructed in early 2013, and the Tan Phat building in mid-2014. In addition, Tecco has also invested in a 20-story tower (Building C) in the C1 Quang Trung area, which has now reached the 12th floor with 160 apartments, each ranging in size from 70 to 102 m2. Mr. Bui Van Quyen, Director of Tecco's Vinh branch, said: "The company is investing in projects in advance to anticipate the real estate market, which is predicted to improve in 2014 and 2015. Waiting until the market warms up before investing would be too late, because the construction and completion time is quite long. Moreover, the company invests according to the schedule committed to customers and never misses a deadline. Fortunately, these apartment buildings have already attracted a large number of customers." Ms. Nguyen Thi Lan, Director of Tecco's Real Estate Exchange, added: "The Tan Binh apartment complex has sold 70% of its apartments, while the Tan Phat apartment complex has sold over 50%. Currently, both projects are being constructed day and night to meet market demand. Even when the land and housing market is sluggish, real estate agencies in Ho Chi Minh City are still actively pursuing projects." Even after Vinh closed down and disbanded, Tecco Real Estate continued to operate. Their employees distributed flyers daily at offices, workplaces, and residential areas, promoting attractive home purchase offers. This ensured their salaries were paid while also attracting customers with genuine housing needs. Most of these buyers purchased homes for personal use, including both civil servants and individual business owners in the area.

Vinh Urban Development Joint Stock Company (Vinhland) is investing in affordable housing for low-income earners at only 350 million VND per apartment, with buyers able to repay the bank over 25 years. According to Ms. Nguyen Thi Yen, Director of Vinh Urban Development Joint Stock Company, people only need to pay 1.5 - 2 million VND per month, including principal and interest, to own a home. This is also an effective measure to stimulate the real estate market by the company itself. Projects such as Trang An, Vinaconnex 16, and Muong Thanh have also restarted projects and launched real estate sales campaigns to welcome the 2015 market. From 2014 to the present, anticipating the genuine need for housing, businesses have invested in the housing segment priced under one billion VND, especially houses priced from 500 to 700 million VND, which are considered to still be easy to sell. Developers are also focusing on researching and designing apartments that are increasingly convenient, meeting healthcare and living needs, and investing in cultural centers, kindergartens, parks, lakes, etc.

Demand stimulation policy

Transactions related to the issuance of land use right certificates at the one-stop service center in Vinh City. Photo: CL

The government's market stimulus policies in recent times are having an effect, although not yet significant. The 30 trillion VND stimulus package is being expedited by ministries and agencies, along with the easing of procedures. According to Ms. Nguyen Thi Lan, Director of Tecco Real Estate Exchange, "in 2014 and 2015, the exchange mostly dealt with customers with genuine needs, with no speculative or fictitious buyers. Many customers were facilitated in obtaining loans to acquire housing. Not only are customers with genuine needs seeking to buy real estate returning to their true value, but the 2015 real estate market also shows promise, as other markets like gold and foreign currency are frozen, attracting investors with strong financial resources to remain loyal to the real estate market. In addition, the removal of obstacles from the relevant laws has created a potential customer base, with the apartment market proving more attractive to the budgets of a segment of the population with average and low incomes. The amended Housing Law, passed by the National Assembly (November 25, 2014), stipulates that foreigners are allowed to buy houses in Vietnam." A new direction for the real estate market is predicted to be the hottest news, thereby creating a new customer base for this market. Article 159 of the Housing Law allows foreign organizations and individuals to own housing in Vietnam through various forms, including investment in housing construction projects in Vietnam, purchase, lease-purchase, receiving as a gift, and inheritance of commercial housing including apartments and individual houses in housing construction investment projects, except for areas ensuring national defense and security as stipulated by the Government. As a city quite attractive to investors, Vinh has long welcomed many investors from Japan, South Korea, and China. However, most investors are currently staying for extended periods in hotels or in their company offices, which is very inconvenient. Allowing them to buy and own houses in Vietnam will certainly create better conditions for them in their daily lives and work.

In 2014, the real estate market was considered to have hit rock bottom and couldn't fall any lower; this was a favorable time for customers with genuine needs for housing and land. Therefore, in the first quarter of this year, the real estate market has become more active, clearly seen in the apartment and affordable land market in areas surrounding Vinh City. And at the beginning of the year, land prices have slightly increased, including land prices approved by the State, which seems to be the biggest hope for the project land market, as there are very few "speculative" transactions on the market...

Chau Lan