Vietnam's real estate market has been in the doldrums for the past five years, but more especially in 2012, and there are no indications of recovery in the coming year.
"If the government does not intervene with appropriate and timely measures, the real estate sector would suffer more," an executive of a real estate firm, who declined to be named, told Xinhua in an interview.
The executive has been working in a city-run housing trading and brokerage company since 1989. The company has now been converted into a share-holding company. At one time, his company had up to 600 employees, but now it only has a staff of 60.
"I have to reduce my staff to the minimum, which helps in lowering our budget and in going through the current tough and competitive environment," the executive said.
He said that in 2012, the year-end bonus for their employees would be equal to only one-month salary compared to three-month salary years ago.
"I have no choice. The company's profit this year was only one- tenth of the previous years' figure that reached up to 200 billion VND (roughly 10 million US dollars) per year.
Some years ago, the real estate sector was considered the most profitable business in Vietnam.
However, since the real estate market has hibernated along with Vietnam's economy, apartments and houses have been left unsold, and investors are losing money.
Though many projects have been on sale with big discounts, sales have continued to dip.
Land price in Vietnam is believed to be the most expensive in the world. In 2011, the Vietnamese people's average income was ranked 120th in the world while its real estate price ranked 20th.
Analysts are worried that the real estate bubble in Vietnam will burst if the government does not make remedial measures to help the ailing real estate industry.
One analyst said that if the government has enough capital reserves, it can come up with a timely stimulus package to support key sectors of the economy, including real estate.
"Apart from a stimulus package, flexible legal regulations relating to real estate should also be applied so investors can re- adjust their business plan," the analyst said, adding that lowering the land rental tax for investors would be a significant move.
According to him, having a strong capital reserve is a big problem for real estate investors, especially those who have to borrow money from banks to run their business. Only those with enough capital reserve can survive during this difficult time, he said.
In Vietnam today, residential houses are selling quite well because the average-income families can afford to buy them backed by low-rate bank loans. However, this still can not solve the problem of high inventories in the overall real estate business.
Nguyen Khanh Phuong, director of a property transaction company in Hanoi, seemed to be a "lucky" businesswoman, as she told Xinhua that her business went "okay" throughout this year, despite lots of difficulties.
"We have to re-adjust our business lines to suit to the market's fluctuations and to meet the buyers' diverse demands," Phuong said, adding that "there are clients from different walks of life, with different income levels, and we try to satisfy each one of them."
Ha My and her husband are among Phuong's clients who bought high-class apartments at the Golden Palace building in the newly- developed hub at My Dinh area in capital Hanoi. The project is scheduled to be completed in 2014.
The couple, who are in their thirties and both working for foreign companies for more than 10 years, bought a 105-square- meter apartment through Phuong's company.
They have to pay for their future apartment (32 million VND, or 1,600 US dollars, per square meter) in four installments, with the first one covering 30 percent of the house's value paid when they signed the purchase contract, and the final one in 2014 when they move into the house.
"My clients, like My and her husband, are not rare. They buy houses where they can live with the help of the bank. I hope we can sell more products. But I think the country's real estate market can only recover in 2014, and thrive again from 2015," Phuong said.
Official statistics showed that at the end of the third quarter in 2012, the turnover of real estate businesses listed in the stock markets decreased by 20-25 percent and their profit fell down by 35-40 percent year on year.
Le Dat Chi, head of the Financial Investment Department of the HCM City Economics University, said that because of the current unfavorable global economy and limited sources of capital at home, investors can't expect a faster economic growth without which the government could not afford to have a stimulus package for the real estate industry.
"There will be a pessimistic scenario for the national economy in the coming years, and investment channels, including the stock market and real estate industry, are going to be affected," he said.
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