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Viet Nam Real Estate Newsletter A64 Page 2
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MARKET SITUATION10 outstanding events of realestate markets in 2008
Vneconomy – 30 Dec, 2008 The year 2008 can be considered to be the year of many rare movements on the global real estatemarket in general and the Vietnamese real estate market is no exception.
1. Real estate prices continuously dropped
- This was the first time in many years that the real estatemarket witnessed the consecutive sharp falls in prices within 3 months (starting from April). The sharpestprice falls occurred in the housing segment, especially the high-grade houses, with decreases of 20-40%. The price falls were anticipated by experts who said that the price decreases would come after anoverly hot development period. The main reason behind the sharp price falls was the government’spolicy on tightening real estate credit aiming to curb inflation.
2. FDI in real estate saw record high
- The Ministry of Planning and Investment (MPI) has estimated thatup to now, the foreign direct investment (FDI) in real estate has exceeded the total registered FDI of 2007. While the economists have warned of the bad consequences of the overly high foreign investmentin real estate, MPI’s Foreign Investment Agency has said this is not a concern.
3. Hanoi has been expanded -
On 29th May, the National Assembly officially ratified the resolution onexpanding the capital Hanoi. For the pastyear they have been pocketing money from trading land plotsHanoi was expanded to. The land prices in Ha Tay, Luong Son or Me Linh - the localities merged intoHanoi - have also rapidly increased accordingly. However, after Hanoi was officially expanded, the realestate prices in the above areas have also decreased correspondingly to the previous increases.
4. Ministry of Natural Resources and the Environment gets right to define land prices -
On 1stDecember, 2008, the Prime Minister signed a decision on assigning the Ministry of Natural Resourcesand the Environment, instead of the Ministry of Finance, to define land prices. All of the matters relevantto the duties and rights of land assessment, records, documents and the civil servants working on theland assessment of the Finance Industry will be transferred to the Department of Natural Resources andEnvironment
5. Investment in golf courses boomed -
The whole country had 144 projects licensed just within a half of this year. The reason of this boom is the profits that golf course projects have brought. However, beforethe warnings of the experts on the corollaries of the golf course boom, some local authorities havestopped licensing golf projects. This has made the investment wave cool down. However, this does notmean that the movement will stop, as this remains a profitable investment channel.
6. Rushing to open real estate trading floors -
Despite the gloomy real estate market, the investors havestill rushed to open real estate trading floors. However, according to the Ministry of Construction, whilethe number of trading floors has increased rapidly, the quality of the floors has remained low. In the near future, the Ministry plans to set the requirements on the standard floors in order to create the advantagesfor both buyers and sellers as well as ensure the transparency of the market.
7. Real estate shares not favoured -
The influences from the real estate market have led to the sharpfalls of real estate shares. However, according to experts, the decline in the real estate and stock markethave been the opportunity to own the real estate shares at low prices, creating conditions to take the firstopportunities when the market recovers.
8. The movement of selling houses on paper -
The movement is considered both the cause and theconsequence of the real estate bubble. According to regulations, investors are not allowed to raise thecapital when the foundation of the projects hasnot been completed. However, investors have found outthe method of “contributing the capital to the projects” to attract the capital from the customers.
9. The odd bet
- Many people have shown that the bet worth 100 billion between the groups of veterans,architects, etc and Keangnam group like a comic clip has helped the real estate investors to reduce thestress when the real estate market is experiencing the difficult periods.
10. Consultants were threatened with lawsuits
- Some real estate developers in HCM City said that theinformation about real estate prices released by the consultancies were incorrect. This matter has notonly affected the prestige of the consultants but also warned the management organizationsto quicklybuild up the price index for the real estate market.
REAL ESTATE FOREIGN INVETSMENTLong Thanh Golf to build 5-star hotel in Laos
VietRees – 27 Dec, 2008On 26th December 2008, the Ministry of Planning and Investment of Laos licensed the project of the 5-star resort in Vientiane, Laos invested by Long Thanh Golf Investment and Business JSC(Vietnam).With a total investment if nearly 1 billion USD, the project is built on a site of 557 hectares, including agolf course, a 5-star hotel and a high-grade villa area. The construction period is 50 years and theinvestors can ask for the extensions if they have requirements.
Starwood to build resort at CamRang, Khanh Hoa
Kinh Te Do Thi – 29 Dec, 2008Starwood Hotel & Resorts Worldwide has shown that it has completed the contract with Phat Dat realestate company about the construction of Westin resort at Cam Ranh Bay, Khanh Hoa province. It isexpected to be opened in 2012.The Westin Resort & Spa, Cam Ranh – the first hotel with the brand of Westin in Vietnam -will have 330rooms overlooking the sea, 8 restaurants, spas, children clubs.
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