A lot of high
grade apartments have been marketed recently in Hanoi, while transactions on
real estate trading floors remain quiet with low demand. Small investors now
offer to sell apartments at a disadvantage to stop loss.

Investors’ capital “buried” under
apartments

On an
online real estate trading floor, one can see an ad piece where Trang, the
owner of a C-class apartment of Ecopark project, is offering to sell the
apartment at a disadvantage. “After surveying the sample apartment, I found
that the products here are too attractive with excellent infrastructure items
and beautiful view. Therefore, I purchased an 83 square meter apartment at
95,700 dollars with 40 percent of the contract’s value paid in advance,” Trang
said.

“The
project is expected to cover an area of 500 hectares, but the project developer
has just finished a small part of the project. I think that it will take a long
time more to complete the project,” she explained why she decided to sell the
apartment. “I would rather to sell now and incur losses than waiting more”.

Trang has
calculated that if she sells the apartment now and inject money in other
apartments now on offer, she would obtain a bigger profit.

However,
even when Trang accepts to sell the apartment at a loss, she will find it
uneasy to find buyers. Even the developer of Ecopark is now offering the big
discount of 12 percent to attract buyers.

The Tue
Tinh real estate trading floor in the Hai Ba Trung District in Hanoi only received two or three visitors in
the whole morning. Quyen, a broker, said there has been no high grade apartment
successful transaction in the last month. He also said that many investors are
offering to sell Ecopark apartments on the floor.

“Most of
the investors have to borrow money from banks to surf on investment. But they
now have to pay debts to banks, therefore, they have to accept to sell at a
loss,” Quyen said. “However, it is difficult to sell apartments at this moment,
because the projects’ developers themselves also offer high discount rates to
attract customers”.

On Dat Xanh
real estate trading floor in Cau Giay District, Hoai Thu, a broker, said there
have been only some successful transactions recently, where people purchase the
apartments of Times
City project. “The
sellers are the ones, who could purchase the apartments at low prices thanks to
the “close relations” with the developer and VIP,” she said.

Other real
estate trading floors in the city have also been reportedly quiet because of
the low demand.

However,
project developers still have announced satisfactory sales results. Bui Tien
Hung, Deputy General Director of Vihajico, the developer of Ecopark, said with
the discount of 12 percent within three days, April 23-25, 85 percent of
clients, who visited the project, registered to buy apartments during the day,
while some others returned the next days in order to be able to purchase
apartments at preferential prices.

Supply exceeding the demand

According
to Colliers International, there are some 45,000 apartments in Hanoi. About 11,000 new apartments were
offered to sell in the first quarter of 2011. They were mostly the apartments
of the projects in the west of Hanoi
such as Ha Dong district (28 percent), Thanh Xuan (29 percent) and Tu Liem 14
percent.

Colliers
International has forecast that in the next three years, Hanoi would have 70,000 new apartments in
supply. Vu Xuan Thien, Deputy Director of the Housing and Real Estate Market
Department under the Ministry of Construction, said that the supply of
apartments at old projects is still profuse, while new apartments have been
marketed already, which has led to the saturation in the high grade apartment
market.

Explaining
the gloomy high grade apartment market, Nguyen Quang Hung from the Hanoi Real
Estate Club, said small investors are trying to bargain away now because of
their financial problems. The investors purchased apartments with the borrowed
capital, while banks have stopped lending capital to fund real estate
investments and have been trying to take back loans.

Source: Tien phong