Amid rising interest rates, Hanoi’s cash-strapped villa investors are slashing prices by up to 40% to lure customers.
Loi spent VND32.5 billion (nearly $1.4 million) on a 180-square meter villa near Ring Road No. 3.5 in mid-2022.
He paid for the house with a bank loan and VND11 billion of his own money hoping his investment’s price would double in two years.
Two months later, the real estate market went silent. He put the villa for sale at a discount of 15%, but found no buyers. Early this year, he finally sold the villa for only VND23 billion.
But despite all this, Loi is still considered a lucky investor, according to Tien, a local real estate broker in the urban area surrounding the villa project Loi bought into.
“Many other investors of villas at the same project haven’t found any buyers at all even after lowering their prices 15-30%.”
According to Tien, since late last year, many investors in the project, most of whom took out bank mortgages to pay for the villas, have slashed their prices 20-30% to cut losses.
One investor has recently sold a 150-square meter villa for only VND17 billion, incurring a loss of VND8 billion.
Brokers at the Hinode Royal Park urban area are trying to sell villas at prices of VND6-7.5 billion, down 40% against last year.
Tu, also a broker, said she sold two villas at the Nam An Khanh urban area in Hoai Duc District for VND23.5 billion each early last year, but the price of the same properties has dropped over 30% to VND16 billion now.
Villa offering prices at many other large-scale projects, including the Ha Do Charm Villas and An Lac Green Symphony, have decreased 25-30% over the past year.
Most of the villas are being bought and sold by speculators, and many of them have been abandoned.
According to real estate consultancy Savills Vietnam, the average villa price on the secondary (resale) market was VND22 billion in the first quarter of this year, 17% lower than the properties’ primary market (original) prices.
As a result, some investors have leaned deeper into the secondary market and many have become speculators.
Experts have also asserted that this is one major reason that the primary market has been so stagnant, with the absorption rate falling to the lowest level in the past seven years.
Do Thu Hang, senior director of advisory services at Savills Vietnam, has predicted that liquidity in the villa market is likely to improve, but only for villas bought as homes, not investments.
After construction of Ring Road No. 3.5 and Ring Road No. 4 is completes, over 80 property projects along the major new arteries will attract more buyers, she said.
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