REAL ESTATE TRADING FLOORS STRUGGLE TO SEEK SUPPLIES

Housing supply in Ho Chi Minh City is on the downward trend with the number of products increasingly limited, making it hard for real estate trading floors to find supply sources.

Desperately seeking supplies

Sharing with reporters, a representative of a real estate brokerage in Ho Chi Minh City said the biggest challenge in the remaining 6 months is not to find customers but to find supplies.

"This time in 2017, my floor had 9-10 apartment and land projects to distribute to the end of the year. However, this year, we have just received two projects to distribute, and are competing hard with many other floors for more," he added.

From now until the end of the year, the Ho Chi Minh City market has only about 5-6 land and townhouse projects to be implemented, offering a supply of not more than 1,000 sites. Coastal provinces also have almost no new supply. For small projects, investors often distribute their products themselves, not through any floor, so in Ho Chi Minh City, looking for a project to distribute is not easy.

Not just land, apartment segment is also facing scarce supply. The period 2016-2017 saw new products launched one after another, offering a wide selection of choices for trading floors, but now the number of projects are less and less, there are not many options.

Duong Thanh Trung, a representative of VSlands Real Estate Trading Floor, said that in the past, his floor mainly distributed land projects but now he has to resort to apartment projects because of no land source available in Ho Chi Minh City for distribution. Due to the scarce supplies and increased trading floors, investors often demand more from distributors.

Not only small trading floors have difficulty finding the source of goods, even the well-known distributors also have to struggle to find the product to offer. A representative of a large real estate company said that the company has more than a thousand sales staff, but the supply offered from now until the end of the year is only about 1,000-1,500 units, divided into several stages, so it is difficult to get around the lack of products for sale.

Supply continues to fall

Several big real estate developers and distributors such as Hung Thinh, Dat Xanh, Novaland, Him Lam, etc have become less active in project sales than in 2016-2017. Many trading floors said that the number of stocks they are holding must be 20-30 per cent lower than that of 2017.

One of the reasons why Ho Chi Minh City's real estate supply is increasingly difficult to find is the lack of land for new projects. Currently, the city's land fund is almost empty.

According to reports of market research agencies, in the first six months of 2018, real estate supply in Ho Chi Minh City has fallen sharply and may continue to decrease toward the end of the year.

Specifically, research data from DKRA Vietnam noted that in the land segment in Ho Chi Minh City, only about 1,453 units are offered, down 55 percent compared to the same period last year and 64 percent less than the last six months of 2017. The segment of townhouses and villas has only 1,137 units offered, down 40 per cent compared to the supply in the last six months of 2017.

Particularly, the apartment segment has 18 projects offering about 9,109 units in Q2/2018, down 35 percent from Q4/2017. It is expected that in the last six months, there will be only about 7,000 - 8,000 new apartments put on the market. Particularly land segment will continue to decline sharply due to limited land fund.

In contrast to the number of supply, the number of newly established enterprises continued to increase sharply in the first half of 2018. Data of the Business Registration Administration under the Ministry of Planning and Investment shows that in the first 6 months of 2018, the real estate sector has 3,286 newly registered enterprises with the capital of VND192,545 billion.

With so many new real estate businesses being created, while product volumes are not enough along with cost burdens, there has been a shift in the development strategy of enterprises.

With the current situation, besides the competition in the search for customers, distributors are to work hard to find good sources to maintain their operation. Many big trading floors have the advantage in the game, but small ones with less experience will find it increasingly difficult to remain on track.

Source: VCCI