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Real estate developers struggle to collect money from buyers   2012-02-09 - TBKTVN

While many real estate developers feel worried stiff because their apartments have been left unsold, others feel worried stiff because they cannot collect money from buyers.

 

Though the real estate projects’ owners have signed the contracts on selling apartments to customers, they still do not have money, because buyers cannot make payment on schedule.



Edward Chi, Chair of the Minh Viet Investment Company, said that the biggest worry now for real estate firms is the tardiness in collecting money from buyers.



At the Tricon Towers project in Bac Anh Khanh residential quarter in Hoai Duc district of Hanoi, the majority of apartments have been sold, but the investor has not collected money in the second and third payment phases as previously planned.



The investor tries to share difficulties with the buyers by offering some preferences, including the price discounts and the delayed payment timetables. However, as the credit has been tightened, commercial banks refuse to provide loans, the liquidity has become seriously weak, and the investor cannot take back the investment capital as previously expected.



Tricon Towers is not alone. Failing to collect money is the worry of many other investors. The Mulberry Lane project in Ha Dong district developed by CapitaLand Hoang Thanh, a joint venture between a Vietnamese and a Singaporean enterprises, has seen the first phase of construction finished, under which the foundation has nearly completed. However, the investor complains that it is very difficult to collect money at this moment.



The investor may even have to face a lawsuit to be raised by the buyers, who said that the payment must be made in Vietnam dong under the current laws, while the apartment sale contracts, signed in 2008-2009, comprise the provisions about the prices in the dollar.



The rumor that real estate developers can make a profit of hundreds of billions of dong has made it more difficult for them to do business, as people have turned their backs to the real estate market.



The market’s difficulties have become so serious that most recently, South Korean Inpyung Group, the owner of Daewoo-Cleve high grade apartment project in Ha Dong district in Hanoi has to “belittle itself”.



The investor lends money to the buyers at the preferential interest rate of 12 percent per annum, so that they can have money to make payment for the second and fourth phases of payment. The sum of money Inpyung spends to stimulate the demand for its project may make nothing if compared with the huge total investment capital of 420 million dollars. However, the move can truly reflect the current situation.



While Inpyung has been facing difficulties with its project, another investor, also from South Korea – the investor of Keangnam Landmark Tower – proved to be luckier. It could sell 1000 apartments quickly at the prices of 3000 dollars per square meters.



However, the time when apartments can sell like hot cakes is over. Nowadays, real estate products have been selling very slowly despite the price discounts and preferential conditions in making payment.



CBRE, Knight Frank or Savills Vietnam, the most well known real estate service providers in Vietnam, all have reported that the liquidity of the real estate market in Vietnam has been decreasing steadily with the sales of the next quarter lower than the previous ones.



“The real estate market has never before been so difficult as nowadays,” commented Nguyen Van Kha, Chair of the Tu Liem Urban Development Company, about the current situation of the market. Meanwhile, experts believe that the prices would decrease further in 2012.



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