High-end rentals buoy real estate

Industry analysts say most local developers are still facing a hard time and those projects that have not been constructed and delivered on time are seeing interest, and price, drop. Land in Hanoi’s Cau Giay District was auctioned recently for up to $1,500 per square metre, or $375 higher than reserve price, and to date few investors have announced pricing reductions despite slow sales.
“Projects with good location and quality construction are still maintaining high prices,” said Vu Quang Hien, managing director of Ho Chi Minh City-based CitiPlus property consulting firm.
Luxury apartments in downtown areas in Hanoi and Ho Chi Minh City are selling for $1,000 to $2,000 per square metre and Hien said prices of projects near completion, such as the Cantavil Apartment Complex, have tended to go up as buyers show increased interest.
Malcom Whitehouse, Leonidas Management general director - the marketing agent for Golden Westlake in Hanoi, said sales turnover and the level of interest from investors have been gradually been increasing since the beginning of the year.
“Prices have firmed at Golden Westlake and are up between 5 and 15 per cent from the launch price in November 2005. There is no reason why prices should not continue to escalate because there are simply no other outstanding choices available in the market,” said Whitehouse.
Strong demand for larger apartments has buoyed sales revenues with most of the larger apartments either booked or reserved. Golden Westlake is designed with 375 apartment units and prices range from $1,125 to $2,000 per square metre.
“Hanoi still lacks international standard accommodation necessary to service expatriate leasing demands. This situation will become more exaggerated in the foreseeable future, which is just one more excellent reason to favour Golden Westlake if you are an investor,” Whitehouse added.
He also said Viet Kieu investors are featuring more and more although, many tend to purchase via a friend or relative rather than in their own name, irrespective of newly-relaxed laws.
“Foreign interest is extremely high, although most foreigners are uncomfortable with lease-hold title, even though the figures and special terms on offer seem attractive,” he also revealed.
According to Whitehouse, an expatriate could save around two-thirds on rent by taking a longer term lease at Golden Westlake and could potentially make a profit if values rise, as already experienced in downtown Ho Chi Minh City.
Increasing numbers of domestic buyers are coming to understand that real estate offers high value for the money and will generate robust returns. With independent market rent valuations estimating rents of up to $37 per square metre per month, investors can expect to achieve returns well above finance cost.
Construction of the piling work has been completed and the main contract awarded to Beijing Urban Construction, a highly experienced and capable contractor.
“As construction emerges on the city skyline, sales are expected to dramatically surge,” said Whitehouse.
However, Hien said buyers are moving away from projects, including luxury apartments, which have not been able to get off the ground for some time or where construction pace is far behind schedule.




No. 780/September 25 - October 1, 2006