Cheaper and smaller properties will catch the eye of investors as the local real estate recovers later this year, experts have predicted.
Nguyen Manh Khoi, an official at the Construction Ministry's Housing and Real Estate Market Management Department, said the whole market had experienced sharp declines in both sales and prices since a short recovery on Hanoi's housing market sparked hopes in the third quarter last year.
The market will continue to be affected by the complex trends initiated last year and there will be no significant changes in the first quarter of 2010, Khoi was quoted by the Vietnam Economic Times as saying Monday.
But he said a recovery for the market will come together with the country's economic growth. Demand for houses and commercial real estate for small to medium enterprises would surge this year, he predicted.
Experts said in 2010 the focus would be on medium and low price segments where liquidity is expected to be high.
According to a survey by the Ministry of Construction, most of the successful transactions in Ho Chi Minh City recently were on apartments priced between VND10 million and VND24 million per square meter. Meanwhile prices of most completed deals in Hanoi were VND18-31 million per square meter.
Experts said although profits from medium and low-priced properties are less attractive compared to the luxury segment, sales are stronger and thus investment will soon yield profits.
For medium-priced residential projects, developers also don't have to worry too much about capital and construction standards, they said.
An official from the HCMC Real Estate Association said many investors have switched their focus away from large cities as they look for cheaper properties.
"A land lot in HCMC's districts 2 or 7 costs some billions of dong while with only VND1 billion investors can buy two or three lots in Dong Nai or Binh Duong provinces," he said.
Improved infrastructure is also making real estate in other provinces more attractive to investors, he said.
Le Hoang Chau, chairman of the HCMC Real Estate Association, told Thanh Nien that many investors have decided to expand their investment to neighboring provinces like Binh Duong, Dong Nai, Long An and Ba Ria-Vung Tau after spending money on real estate in HCMC.
They also planned to invest in Tien Giang Province after the HCMC-Trung Luong Highway, which links HCMC and the Mekong Delta, opened to traffic in early February.