Developers in Vietnam expected to boost residential sales with new tactics

KUALA LUMPUR: Developers in Ho Chi Minh City (HCMC) are expected to change their tactics to boost residential sales in 2011, according to Marc Townsend, managing director of CB Richard Ellis (Vietnam) Co. Ltd (CBRE).

Many high rise developers are sitting on large amounts of stock, primarily condominiums as the new year begins, said Townsend during CBRE Vietnam Real Estate Update and Overview on Friday, Feb 25.

Majority faced stiff competition yet have few unique selling points, leaving well-branded and marketed properties with unique selling points to dominate the market.

Townsend expects to see below the radar merger and acquisition as well as out front collaboration with other developers, increased advertising and marketing spend, flexible payment terms, the hiring of multiple agents and increased incentives such as promotions and discounts from developers.

However, occupancy for serviced apartments in HCMC remained high at about 90%. There were limited stock of about 220 units launched in 2010 as developers delayed launches to 2011.

This will result in increased stock of serviced apartments in 2011, said Townsend.

He, however, expects demand to remain strong, even with the growing buy-to-let market.

Meanwhile, more affordably priced projects are also expected to be developed in provinces surrounding HCMC such as Long An, Dong Nai and Binh Duong.

Foreign developers like Malaysia-based Berjaya and Gamuda, and Singapore-based Keppel and CapitaLand are targeting these areas as the land is more affordable, noted Townsend.

In the secondary market, capital values are likely to continue falling in 2011 unless something changes in the market. Townsend noted that the secondary market capital values have fallen by as much as 20% in 2010.

Buyers are retaining a wait and see attitude to see prices and interest rates decline. However, buyers desire for landed property are expected to remain strong, said Townsend.

Landed property buyers trend to end-users who are buying for town/country homes, while fewer speculators will be present in the high-rise market as most will be buying for buy-to-let.

The depreciation of Vietnam Dong will result in more people investing in property and gold, added Townsend.