(December 2008) Luxury Real Estate in Vietnam–Market Collapses Due to Overbuilding & Shoddy Quality

Luxuryproperty.com ^ | December 29, 2008 | Mark Knowles

[tlb]

Following Vietnam’s property market collapse earlier this year, luxury apartment prices have fallen sharply, with a 30% drop in places like Phu My Hung and as much as 60% in other areas. The slump has been particularly hard in the luxury segment.

Independent financial expert, Bui Kien Thanh, said local developers had focused too highly on luxury properties. He said the luxury segment is set for more trouble since customers have raised complaints about the quality of the apartments they have bought.

Former deputy minister of natural resources, Dang Hung Vo, said that property prices would continue to fall if no measures were taken by the government to attract more capital into the industry.

Over-borrowing by developers means cutting prices, he said, adding that many of them were unable to sell after the market began to plummet in the second quarter. Prices in large cities have fallen 40-60% in 2008, and the number of transactions has also fallen dramatically, by 80-90% compared to 2007.

Banks are beginning to auction off foreclosed properties, which will also also increase supply in the market, further eroding prices.

Bank interest rates are still high in Vietnam compared to other countries – the peak rate is over 11%. Foreign investors would keep away due to the global financial turmoil, Vo said. Others added that this means the housing market, particularly the luxury segment, is unlikely to recover in 2009. Meanwhile, the chairman of the HCMC Real Estate Association, Le Hoang Chau said that the Vietnamese government’s proposed US$1 billion package to stimulate domestic consumption will thaw the frozen real estate market, although not the high-end property.

Tong Van Nga, general secretary of the Vietnam Real Estate Association also hoped that the stimulus package would help the market.

[tlb]

So looking back it was Vietnam that was the canary in the coal mine. We should have heeded their warning about the luxury real estate market. That would have saved Donald Trump a lot of hassle.

Actually a comfy place in an out of the way area like Vietnam no American had ever heard of would probably be nice.

[Lokibob]

So my hooch finally fell.. Not bad, it lasted over 40 years....

.....Bob

[VeniVidiVici]

Probably using that damn Chinese drywall.

[Lokibob]

“Former deputy minister of natural resources, Dang Hung Vo”

I knew my son would make it some day. Any boy with the name “Dang Hung” has got to succeed. That’s what his mother said “Dang Hung!!!!”

Now you know Billy Clinton wasn’t in VN.

(these jokes keep writing themselves.

.....Bob

[Parley Baer]

I was thinking of buying some property in One Hung Lo.

[Jan Hus]

Yes . I remember those hooches by the roadside made out of aluminum sheets that were defective Budweiser and Busch Bavarian can planches that USAID gave to the homeless way back when. I especially liked the hooches by the railroad tracks in Saigon. Reminded me of the tenements along side the old “Third Avenue El” in NYC .

[crazydad]

PHU MY HUNG?????? VIETNAMESE JOHN HOLMES????

[ThanhPhero]

Most of these are townhouses and many are exquisite examples of the Dr. Seuss School of Architecture. They are pretty fantastic.