Big real estate projects kicked off
Many big real estate developers believe it is now the right time to start projects aimed at long-term profit. Investors don’t think the current quiet market is a catastrophe. The demand for accommodations is on the increase while construction material prices have been decreasing.
Minh Viet Company has recently kicked off Tricon Tower, one of the first projects in Bac Anh Khanh urban areas. This is expected to be a complex of three 45-story towers designed as high-grade offices and apartments. The project has the total investment capital of $145mil.
Indochina Plaza Hanoi, a trade centre, office, apartment project has also been restarted after a period of interruption for many reasons. Though the real estate market remains quiet, the investors still successfully persuaded Vietcombank to give a loan worth $44mil to develop the project.
The funding of the project by a commercial bank showed that opportunities in the real estate market can be realised not only by real estate investors. Therefore, the fact that Vietcombank, which has never been thought of as a big lender in real estate, has agreed to fund the project, is really noteworthy.
Tran Ngoc Quang, General Director of Vinacomex-ITC, an investment and tourism development joint-stock company, said that it is difficult to predict when the real estate market will recover. However, this does not mean that investors should wait and see; they need to take action now to overcome difficulties and prepare for the recovery period.
Quang said that the demand for accommodations keeps rising, which also means that the market is very large.
That explains why the Cai Gia-Cat Ba project invested in by Vinaconex, capitalised at over $500mil, has still been implemented despite the gloomy market. Most recently, Vinaconex-ITC has spent several billion VND to develop a real estate trading floor serving long-term business development.
When asked why Minh Viet kicked off a big project at the moment, when the market tendency remains unclear, Edward Minh Chi, Chairman of Minh Viet, said that he believes the market will warm up by the end of this year after undergoing big difficulties in Q2 and Q3. He said that the market will absolutely have recovered by 2011.
“Investors need time to prepare for the market, and it is now the right time to do that,” he said.
While some investors complain that the continued price falls of real estate have made it difficult for them to carry out projects, others believe that it is now the right time to invest, especially as construction material prices and labour cost remain at low levels. As credit interest rates have decreased, real estate developers can easily access bank loans if they have good projects. The investors believe that real estate price decreases are not a catastrophe at all, but a business opportunity.
Source: Vietnam Net