Despite not showing much sign of recovery, the real estate market is exhibiting a surprising ability to absorb investment from all available capital sources, including banks.
Since the beginning of this year, banks have lent to several property projects. In the country’s two biggest real estate markets. Ha Noi and HCM City, around 10 major projects alone have absorbed around US$1 billion in bank credit.
In January, the Bank for Investment and Development of Viet Nam (BIDV) agreed to lend Hoang Anh Gia Lai VND5.65 trillion, ($323 million) for property development.
In February, The Bank for Foreign Trade of Viet Nam, known as Vietcombank, gave Indochina Land a loan of $44 million to develop the $145 million Indochina Plaza Ha Noi, a housing, office, and commercial complex.
Fei Yueh Viet Nam began construction of five-star hotel Nikko Sai Gon in District 1, HCM City, at a projected cost of $100 million. Some banks have said they are ready to fund “good” property projects that are easy to buy and sell.
Nguyen Hoa Binh, chairman of Vietcombank, said Indochina Plaza is a sound project.
The Bank of Technology and Commerce, known as Techcombank is targeting really sound property development projects for lending, Nguyen Duc Vinh, its general director, said.
Besides lending to property developers, many banks have also earmarked considerable sums of money to lend to individuals buying housing. The latter amount is estimated at VND65 – 86 trillion. Vietcombank is considering lending to people buying apartments in Indochina Plaza, Binh said.
Vinh revealed that his bank has earmarked VND1.5 – 2 trillion for loans to people who want to buy or repair houses in the next few months.
ABB Bank has given an estimated VND3 – 5 trillion in personal loans, a large part of which is thought to have gone into the property market.
Dang Hong Anh, chairman of Sacomreal – the property trading arm of the listed Sacombank – said the real estate market is ripe for recovery after a year of being in the doldrums.
Housing and land prices as well as bank interest rates have plunged and the Government is implementing several stimulus programmes, he said.
If property developers are ready to relinquish some of their profits and sell at reasonable prices, people would be ready to buy, he added.
Analysts said many property developers are opting for apartment blocks with small units to meet an increasing demand from young couples with moderate incomes.
Earlier this month, the Nam Cuong Group (NCG) began construction of two units of its NCG Residentials in Ha Noi’s new Duong Noi urban area.
At NCG Residentials, to be completed in 2011, 71 percent of the units have an area of 55 -sq m.
