Real estate market developments in areas bordering Ha Noi in the run-up to Tet have exceeded expectations.
Despite a general malaise in the real estate sector, particularly in apartment sales and land, houses with retail frontage have seen brisk business, with high prices failing to deter investors despite their asking price of hundreds of billions of dong.
Retail frontage has always been regarded as prime real-estate, due to its high profitability through commercial use, and this sector has remained volatile despite the freeze affecting the rest of the real estate market.
According to Pham Van Hung, Hadico Real Estates, most customers are looking for housing with retail frontage in areas with good infrastructure and where property is likely to retain its value.
Hung said because demand for retail premises has dramatically increased, this segment of the market has seen fluctuations in prices. Retail frontage on Doi Can Street was trading at VND160 million per square metre, Phan Boi Chau, Nguyen Truong To, Pho Duc Chinh streets ranged from VND230 to VND250 million per square metre.
Smaller streets like Nui Truc, Van Bao, Van Phuc and Linh Lang and Cau Giay District have slightly lower prices, fluctuating around VND100-VND110 million per square metre for land with retail frontage.
Prices in other areas such as Nghi Tam, Thuy Khe, and Tay Ho also range from VND130 million to VND150 million. City centre streets such as Hang Ngang, Hang Dao, and Hang Gai streets are being sold for around VND350 million and VND400 million per square metre.
The survey revealed that after a year of economic crisis, most real estate investors hunting for retail frontage houses are businesses, especially in the finance and banking sectors.
Retail frontage houses sales still rely on brokerages run by real estate transaction centres. They are willing to spend high commissions for people to wait and convince house owners to sell their properties.
Many businesses have a preference for premises larger than 50 to 100 sq.m, and often want to buy an area ranging between 400 and 500sq.m which can be 3 to 5 adjacent properties.
To achieve that, businesses have to ask at least 2 or 3 real estate centres to buy entire areas. According to Hung, costs of a successful brokerage run between VND50-VND70 million. If the deal with 3 or 4 families is successful, a broker can pocket VND200 million.
A head of public relations for a Ha Noi bank revealed that through such an approach an investor had amassed land of more than 1,000sq.m in an ideal location in the city's Old Quarter.
Apartment sales stall
After a period of apartment fever due to property speculator manipulation, pushing prices up during recent months, apartment prices in many projects in Ha Noi have been close to returning to the original prices set by investors.
However, both speculators and investors had expected the market to recover with increasing transactions as Tet nears.
However, what is happening in the real estate market as the Lunar New Year approaches runs completely counter to expectations. The number of successful transactions can be counted on the fingers of one hand. Many investors have been forced to reduce their prices and even accept losses. They believe that after Tet when the building season resumes and many new housing projects become available, apartment prices will decrease again.
Bui Tuyet Lan, a trader in Ha Noi, said she owned two apartments in Mulberry Land Ha Dong and Tricon Tower (An Khanh). The current price has fallen nearly 20 per cent against the four previous months. Currently no-one is interested in buying apartments, she said.
Lan said because she needed money and was afraid of further reductions she had accepted a loss of nearly 20 per cent. Most housing projects in popular areas of Ha Noi such as An Khanh, Duong Noi and My Dinh face sluggish sales. Speculators have lowered prices from between 10-30 per cent compared to the price-fever that affected the real estate market just two months ago.
Land prices in residential development areas have also decreased from VND5 to VND7 million per square metre, down to an average of VND21 and VND33 million per square metre depending on location.
Land prices and divided land plots in Mulberry Lane in Ha Dong have been offered at reduced prices of between US$40 and $50 per square metre, Usilk City also has cut prices by $30 and $90 per square metre, but offers have been slow in coming.
Hoang Manh Duong, a land broker said Lan's case was quite common. Investors had not predicted the development but it was logical, taking into account market trends at the end of last year.
Most investors had expected to earn money when prices were predicted to overtake the value of the previous year.
However, traders had rushed to sell houses to realise their profits as quickly as possible late last year. As a result, buyers had lost faith and were afraid of taking losses. This is thought to be the root cause of the fall in current real estate prices; a situation that many speculators had failed to predict and would now have to suffer losses, said Duong.