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Mixed fortunes for HCMC apartment investors   2008-09-05 - Thanh Nien

Investors are making little profit from sales of up-scale Ho Chi Minh City apartments even though prices of lower-ranked apartments have been raised to take advantage of a slight warming of that market section.



But analysts say the owners of mid-range apartments may have acted too soon in raising selling prices. Property sales are expected to remain sluggish while lending interest rates remain high.

Six months ago, investors could buy an under-construction apartment in the high-end US$500 million Saigon Pearl Project in Binh Thanh District by paying about $3,500 per square meter.

With several of the project’s eight blocks now nearly complete, Saigon Pearl apartments are being advertised for sale at $2,300-2,400 per square meter.

A few cash-strapped owners of apartments in the Sapphire building in the Saigon Pearl project have offered a “lower than original” price of $1,800 a square meter.

Prices of apartments at The Manor project in Binh Thanh District have also fallen by more than $500 a square meter to about $2,100 a square meter since the first quarter of this year.

In contrast, many investors in “middle class” apartments – those with prices ranging from $1,000 to $1,500 a square meter - have started to lift selling prices, hoping to make the most of recent signs of revitalization of this segment of the HCMC property market.

Without access to any official statistics, HCMC real estate agents say there is anecdotal evidence of a slight increase in the number of successful deals and the advertised prices in this segment.

Prices for apartments in the Phu My Project in District 7, which were as low as VND15 million ($933) per square meter earlier this year, have soared to VND24 million ($1,493) in prime locations.

Similarly, prices of New Saigon Project apartments in Nha Be District have jumped to VND22 million ($1,369) from VND4 million ($249) and prices of Sunview 1 apartments in Thu Duc District, by VND5 million ($311) to VND15 million ($933).

However, the number of sales finalized at the higher prices had been “disappointing,” market analysts said.

The analysts said sales of high-end apartments had been stagnant since people cut spending in the face of high inflation. This market section was dominated by speculators who now wanted to sell fast to avoid losses, clear bank loans and invest in hotter areas such as the stock market.

The pressure to reduce prices was also increasing as more luxury apartment projects have broken ground this year, the analysts said.

The middle-priced apartment market was more active recently as buyers found good opportunities to buy at fair prices.

But that would not mean the market would recover soon, they said.

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