Ha Noi, Viet Nam
A State Bank of Viet Nam official said, ” Ho Chi Minh City’s real estate market is accounting for around 35 trillion VND or 10 percent of the total loans offered by commercial banks operating in the city”.
Ho Huu Hanh is a director of the State Bank of Viet Nam’s Ho Chi Minh City branch. He also said that since early this year, despite the fact that commercial banks have raised their lending interest rates by 0.05-0.15 percent a month, they have also seen an increase in the number of clients queuing for loans to invest in the property market.
By the end of 2007, the An Binh Commercial Joint Stock Bank had lent property developers 1.2 trillion VND, which accounted for 20 percent of its total lending. The rate was also similar at Sacombank, Techcombank and ACB.
This trend shows a marked difference – in the past, many private property transactions in Viet Nam were done in gold. Vo Dinh Quoc, deputy director of ACB Real Estate Joint-Stock Company, said the number of transactions on private houses decreased significantly when the price of gold on both the domestic and foreign markets increased sharply.
Property prices also increased sharply at the end of last year, and the prices of a high-end condominiums have nearly tripled since the beginning of the year. Prices are currently being sold for around £2,250 per square meter.
Real estate experts are suggesting that the market will remain bubbling this year and is likely to see a growth ranging between 20 and 30%.
During 2008, around 49 luxury apartment projects are planned the market which will create tens of thousands of new condos.
Fearful of creating an oversupply situation in the high end sector and a burst bubble, the central bank in Ho Chi Minh City has urged local banks to be stricter in offering loans for real estate purchases.
Banks are now being urged to thoroughly review the property projects customers wish to invest in, to assess the feasibility and financial stability of the projects.