Metro No.1 “Sneezes”, The Real Estate Market Of The East Has “Disease”?

Metro No. 1 Ben Thanh – Suoi Tien was the lever that triggered the explosion of real estate market in East of HCMC. Apartment project number liked mushroom after rain, liquidity exceeded.

However, the market is showing signs of slowing down in the process of Metro’s stagnation. With Metro No. 1 information that can be stopped in 2018, how will the real estate sector affect?

Psychological effects

Metro Ben Thanh – Suoi Tien is planned to be right at the boiling point of the real estate market in the East of HCMC. This “integration” made the project along the Metro line up much, the price increased. According to CBRE statistics, along with the Metro spine there are about 40 large and small projects. Property value has increased by nearly 20%. In the second quarter of HCMC, the midpoint of the Metro line, asking prices of luxury apartment projects from the average $ 1,490 / sqm moved up to $ 1,650 now, up 11%, compared with the increase 3% across the city.

“The first subway route scheduled for operation in 2020 will make the real estate market more spectacular”, said Marc Townsend, CEO of CBRE Vietnam. Land prices have risen, real estate projects boomed, retail units and office projects moved further away from the center. In some countries, prices may fluctuate up to 45%.

According to industry experts, the real estate market in the East is not affected much from the adverse information of Metro No. 1

However, after a lively time, the “pink” predictions were no longer close to reality when the Ben Thanh – Suoi Tien metro line had slowed down when there was information on capital flight and delays. Metro projects with no investment potential stagnation and transfers quite a lot. The confidence of buyers, especially surfers, seems to be faltering.

Metro No. 1 information that can be paused since 2018 seems to be creating a “cold water” in the market. “If Metro No. 1 really pauses, it will greatly affect the psychology of home buyers. People have been waiting for the Metro for too long”, said Deputy General Director of a leading real estate firm in HCMC. Metro’s stimulation of the East’s real estate market is due to the fact that this project will create a new traffic solution for the area of traffic jams and floods. If Metro 1 is suspended, not only the real estate market but also the socio-economy will be affected.

The East will not “break the battle”

“Metro No. 1 could pause as a negative news at this time of the real estate market. However, its impact on the real estate market in the East is not so big”, said Nguyen Huy Vu, CEO of Viet Land Land. The East is a vibrant market before the Metro planning its own position. The rapid development of the whole area is also a factor to promote the market, of which Metro is only a “plus” factor.

According to Vu, the proportion of projects that create liquidity by “slashing” into the value of the Metro No. 1 is low compared to the total supply of the market in the East. Therefore, the value of the whole region can be affected but not much. “The biggest impact will be the individual investors with the pressure to solve short-term cash flow. However, the “surf” rate in the East is not too much, about 15-20%. The regional market is quite sustainable because it is based on real demand”, Vu said.

Many real estate projects in East HCMC benefited from the connection with Metro No. 1

On the same point, HCM City Real Estate Association (HoREA) Chairman Le Hoang Chau said that when secondary investors face the pressure of selling goods, the supply of apartments in this area will be more abundant and will create more opportunities for real buyers. Mr. Chau also said that the impact of Metro No. 1 on the East is not too large because this route does not run through the densely populated area. Stagnation of this railway will impact locally in some areas such as Binh Thai gas station, Rach Chiec station. Plus information Dong Nai, Binh Duong want to extend this route to the territory of these provinces have not yet realized.

“The delay of Metro No. 1 is a force majeure for the real estate market. Project owners and buyers are not too shocked with this information. Therefore, it is very difficult to break the potential market”, said Chau.

Mr. Nguyen Khanh Hung, Chairman of LDG Group also said that the Metro No. 1 does not play the role of leading real estate market in the East. Because infrastructure has developed well and completed every day. Metro itself is parallel with Hanoi Highway, this is the main “backbone” of the area. The “anchor” projects along Metro No. 1 actually inherited the advantage of this route. For commercial projects, Metro does not make a big decision on the number of guests. “Social infrastructure and utilities throughout the East are also developing very well, stimulating the real estate market. Metro is a big project, but if this project is slow to affect the whole area is not realistic”- Hung said.

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