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Villa prices plunge by VND2b as top-end investors try to sell   2008-11-24 - VNS

 
Things are not looking good for anyone who bought villas as an investment, as low demand has sent prices plummeting.

While most villa owners are holding onto their property because selling prices are too low, value continues to drop and many owners cannot afford to lose anything more.

Late last year, a 200sq.m villa lot in Trung Son residential area in Binh Chanh District, HCM City was selling for around VND6 billion (US$375,000). The average price has since dropped to VND4.5 billion ($300,000), but even at those prices owners are having a hard time selling.

In the last three months, many villa owners in Him Lam residential area in Binh Chanh District put their villas up for sale. But even bringing their prices down by 60-70 per cent, they were attracting fewer and fewer potential buyers, said one retailer from Hung Thinh Company.

Compared to the end of last year, investors are now losing an average of VND2 billion ($121,000) per lot.

Prices have dropped by an average of VND2 billion since August last year. Some owners have had to come even lower to make a sale, according to the owner of one villa in Phu My Hung.

Nguyen Xuan Chau, director of House Trading Joint Stock Company (NovaHomes), said at its peak, his company sold 30 lots for villas in one month, at prices ranging from VND28 million ($1,700) to VND30 million per square metre.

He said the current price was only VND25 million per square metre.

According to experts, fewer investors are interested in purchasing villas. With villas making up one of the smallest portions of real estate demands, when the real-estate market stagnates, villas are affected first.

Anyone looking for property now was usually in need of a home, and looking at the lower-end, one of the largest demands in realty right now, said Vo Dinh Quoc, director of Anh Binh real-estate Investment Joint Stock Company.

However, villas are usually purchased by rich and experienced investors. As the market suffers from the global recession, these investors are having to sell their villas to move their capital into other projects.

Financiers who have bought villas as property investments are facing the biggest challenge as they would lose money by selling now, or can continue to watch their property value fall.

Experts say that even when the real-estate market recovers, the villa market will recover last.


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