How high is the actual price of apartments?

VietNamNet Bridge – The construction cost of apartments is believed to be as low as VND 4 million per square metre, which proves to be affordable for medium income earners. However, the sale prices of the apartments are always three or four times higher than the original prices. Why?

Lan, the owner of an apartment at the CT5 bloc of Song Da My Dinh project is seeking the buyer for the apartment. Lan said she has relatives working for the Song Da Corporation, the investor of the project who helped her purchase the apartment at a low price set by the investor.

However, the sale price she sets for the apartment is not low at all, which can startle every employee: VND 19 million/sq m. As such, in order to get the 120 sq m apartment, buyers will have to pay VND 2 billion.

However, it is not easy to seek buyers at this moment. Duong Quang Phong, Director of QP Real Estate Brokerage Company, specializing in the land and houses in the districts of Thanh Xuan, Ha Dong and Hoai Duc, said that the company has not had any successful deals for the last several months.

Phong said that nowadays, the buyers, who really need accommodations, have a medium income, while those who have a lot of money do not really need accommodations and they just purchase apartments to resell for profit.

According to Phong, the prices of the apartments in Thanh Xuan district or My Dinh urban areas should be between VND 8-9 million/sq m only to stimulate the market. If sellers still require sky high prices, there will not be many successful transactions.

The real estate brokerage centres in other areas like Linh Dam, Dinh Cong, and Phap Van have also reported the same gloomy situation of transactions with more sellers than buyers.

Le Thi Minh, an investor, related that she once used all the assets she had to inject in real estate deals. However, she has quit her career as the demand has become lower while the bank interest rates have been fluctuating. Minh said that she still has two apartments in a project which is now under construction and she has been hard seeking the buyers for the apartments.

According to the Decision No 40/2008 released by the Hanoi People’s Committee, the apartment price is VND 4 million/sq m. However, buyers never can purchase apartments at this price level.

Nguyen Dang Tam, a Civil Engineer who works for the PetroVietnam Construction Corporation, said that the actual construction cost is not high at VND 4 million/sq m.

Tam affirmed that the majority of high buildings in Vietnam are rather like each other in quality. The only difference between them is the infrastructure items of the areas where the buildings are located and the position of the building. The prices of the buildings located in the positions nearest to the centre should be higher by 10-20% than the average levels.

The apartment prices at which buyers have to pay are always higher than the original prices because buyers cannot buy directly from real estate developers, while they have to buy through many intermediaries.

VietNamNet/XD

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