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Gamuda’s Vietnam projects doing well despite high interest rates

Despite Vietnam’s notoriously high interest rates, Malaysian developer Gamuda Bhd’s two developments – Gamuda City in Hanoi and Celadon City in Ho Chi Minh City – are running on full steam. This is according to data released by HwangDBS Vickers Research.

According to the report, Gamuda City’s first three launches have been sold out, raking in sales of $71.65 million. The company has also raised its sales target for the financial years 2012 to 2013 to $163 million and $244.5 million, respectively.

‘Sales at Celadon City are more subdued but we expect the recent land sale to AEON and completion of show units to buoy strong residential sales going forward,’ the brokerage said in a report after a recent site visit.

According to HwangDBS, Gamuda remains the strongest Malaysian proxy to Vietnam with a total gross development value of $4.565 billion.

‘In our view, we think the market is assigning minimal value to its Vietnam exposure but we expect this to reverse once country-specific issues are addressed,’ it said.

For years, Vietnam’s central bank has kept interest rates in the 90-million population country at elevated levels to combat inflation.

As at end-February, its inflation dipped significantly to 16.4% from a peak of 23% last August.

HwangDBS Vickers Research said it was optimistic the Vietnamese government would effectively tackle this issue, with its in-house economists projecting a normalisation of its consumer price index to 10.2% in 2012 and 6% in 2013.

‘This will bode well for property sales in Vietnam going forward as low interest rates will boost home buyers’ affordability.’

‘However, property sales will remain slow for now as cash buyers have been exhausted and interest rates remain unattractive to prospective home buyers.’

‘Property launches have slowed this year so far compared to the same period last year, mainly due to the oversupply of properties in the market.’

‘The number of people attending new property launches has also reduced now,’ it added.

Currently, foreigners account for only 1% of total property transactions in Vietnam, with the rest dominated by local buyers.

(Nguồn: propertylife)
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