Demand for apartments expected to remain high

HCM City (VNA) - Real estate services providers believe demand for
apartments will remain high in both Hanoi and Ho Chi Minh City
despite difficulties because of factors like access to bank loans and prices that are quite a bit lower than their peak in early 2008.

Marc Townsend, managing director of property consultant CBRE, said the
market was also supported by fewer white-collar layoffs than feared due to
the economic crisis and discounts and other promotions offered by property
developers.

Buyers of Sky Garden 3 apartments in Phu My Hung, for instance, can get a
20-year home loan of up to 90 percent of the cost from Bao Viet Bank thanks
to an agreement between the bank and the developer Phu My Hung Corp.

Another property consultant, Savills, cited the modest per capita housing
space of seven square metres in the capital.

"The limited supply in the apartment-for-sale sector in Hanoi may not be
adequately addressed over the medium term, owning to the present market,"
its managing director Brett Ashton said, warning also about possible delays
and cancellations in projects.

In HCM City , demand for apartments in the central business district
(CBD) - districts 1 and 3 - remains high but there were no projects there in
the first quarter.

District 2 and 7 are the most exciting markets thanks to brand-name
developers in District 7 and promising infrastructure projects linking the
area to the CBD in District 2.

Developments featuring affordable apartments will prove more successful and
sustainable in the coming years, according to the industry.

Efforts by the Government to develop low-income housing would give a helping
hand to this sector, insiders said.

The serviced apartment sector has seen a dip in growth, with
quarter-on-quarter occupancy rates going down a percent to 88 percent in
Hanoi in the first three months. It is anticipated that fewer
international companies will be willing to hire high-end units for staff,
but exploring affordable solutions like buying apartments.

Now new supply came into the market, which remained almost unchanged at
2,100 units with a combined area of 207,000 sq.m in 41 serviced apartment
buildings.

Savills said the supply in the capital's CBD is likely to remain restricted
for several years with no major developments planned. In HCM City , two
high-end projects, Kumho Asiana and Crescent, expected to join the market
this year, will make it more competitive.

The economic storm has left no place unaffected, including the office
sector. Occupancy rates in both HCM City and Hanoi declined more
than 3 percent from the fourth quarter of 2008 to 88 percent this year.

The average rent in the capital saw a fall of 11 percent, or nearly 4 USD
per sq.m a month.

In HCM City , the average rent fell to 33 USD from 42 USD per sq.m a
month. Though there was no new supply in Grade A, rents fell 19 percent.
Demand for Grade B space has increased since more Grade A tenants are
considering a move to Grade B buildings.

According to Savills, HCM City may get an additional 960,000 sq.m, or
150 percent of existing space, in the next four years, with projects like
Kumho Asiana Plaza , Crescent and Centec Tower to be available
this year. The figure for Hanoi is likely to be more than 1.1 million
sq.m by 2012.

Overall demand for new office space of all grades would come down throughout
this year and potentially in 2010, it said.-Enditem