Local property developers are finding ways to survive the gloomy property market which experts say is unlikely to recover in 2012.

For instance, Ho Chi Minh City-based Construction and Investment 8 Joint Stock Company (CIC8) is urging shareholders to share the difficulties by using last year’s dividends to buy the unsold condos and land lots. But CIC8 will still pay cash dividends for those who don’t join the plan for one year with a monthly interest of 2 percent.

Phat Dat Property Development Corporation, which had to revise down its targets of VND1.1 trillion in sales and VND360 billion in pre-tax profits for 2011 to a meager VND148 billion and VND8 billion last November, has decided to cut down this year’ investment plan to VND400 billion from the initial VND1.4 trillion.

Phat Dat has also taken industry players by surprise when it announced its plan to invest in forest and agricultural tree planting projects, which is a brand new area of investment for this company.

Chairman and general director Nguyen Van Dat said real estate remained Phat Dat’s core business operation but the company needed to look for new investment channels to prop up its difficult core business. Rubber cultivation is an option under consideration as this promises higher returns under current circumstances.

Dat said the development of the agricultural industry was encouraged by the Government, so his firm may be able to break even after 6 to 7 years of rubber farming.

Hoang Anh Gia Lai, a well-known property developer, has already been involved in rubber plantation for years. The agricultural sector does not guarantee as high and quick profit as the property sector but is highly valued for its stability.
Vo Tan Thanh, deputy general director of Phat Dat, said that investing in the agriculture sector was a great change for his enterprise. This change will help diversify investments and sources of incomes to pull the company out of the current woes.

Observers say the plan sounds rational but the question is whether leaders of Phat Dat will be able to persuade their shareholders to jump on the bandwagon.

The housing and property management department under the Ministry of Construction has pointed out an imbalance in the housing structure as reflected in a shortage of medium and small-sized condos with reasonable prices.

Among the 35,000 apartments completed before 2011 in HCMC, around 37 percent of them are classified as high-class, 38 percent as medium-cost and 25 percent as low-cost.

Le Hoang Chau, chairman of the HCMC Real Estate Association (Horea), said each housing segment had its own customers. The reality is that the medium-cost housing segment has been doing good business given strong demand.

Local traders say housing demand remains huge, especially for the medium-cost segment, in big cities. The lackluster property market over the past 4 years has eroded the confidence of individual secondary investors.

Therefore, numerous investors have managed to focus on medium and small-sized apartment projects, and adjusted existing schemes to meet the actual needs of consumers.

Saigon Thuong Tin Tan Thang Investment Real Estate Joint Stock Company (TTJSC) last week started marketing its Celadon City condo project covering over 82 hectares with about 7,000 units in HCMC’s Tan Phu District. To meet demand, the developer narrows the area of each apartment from 90 square meters to 65 square meters.

Similarly, Thu Duc Housing Development Corporation (Thuduc House) plans to develop low-cost housing projects alongside the medium segment. These small condos cost VND500 million to VND600 million per unit.

Singapore’s CapitaLand is targeting middle-income people for its projects, with an apartment building in District 2 and another in Binh Chanh District.

Source: Tuoitrenews