Soft loans for Indochina Plaza homebuyers

Indochina Land has signed an agreement with Bank for Foreign Trade of Vietnam (Vietcombank) to offer an interest-free loan program for homebuyers of the Indochina Plaza Hanoi apartment project.

Under the program, homebuyers can take out soft loans accounting for up to 60% of the apartment’s value at a zero interest rate and enjoy a grace period of 18 months from the date of the first disbursement being made.

Indochina Land introduced a similar program last year, with no interest for one year. After seven weeks of launching the program, the realty developer sold 36 apartments.

Many customers need a suitable financing solution that can help them extend loan payments, usually for one year, Michael Piro, director of Indochina Land, said.

Homebuyers in the program will have enough cash to cover an upfront payment equivalent to 40% of the contract’s value to own a home.

The Indochina Plaza Hanoi comprises two buildings with 386 high-end units, a grade-A office tower covering 18,000 square meters and four floors for retail space measuring up to 14,000 square meters. - Source: The Saigon Times

Property project costs go skyward

Many property projects saw investment costs upwardly revised on the back of soaring input expenses.

For example Capitaland-Vista’s apartment and trade services development $90 million price tag has climbed to $125 million, up $35 million or 39 per cent, in the past few years due to escalating building materials, manpower and construction services or input costs.

In Hanoi, Indochina Plaza Hanoi in Cau Giay district’s Dich Vong ward also saw investment costs more than double from $67 million to $146 million.

Foreign Investment Agency figures show that from early 2012 until March 20, 2012 29 projects, both foreign and domestic investment, asked for a total supplemental capital of $368 million.

The Hanoi Times Tower project, developed by PetroVietnam Premier Recreation Joint Stock Company (PVR), saw its investment rising from VND1.454 trillion ($69.2 million) to VND1.788 trillion ($85.1 million).

Developer PVR has attributed surging investment to higher input costs such as building materials up 18-25 per cent in price.

Nha Vui’s general director Nguyen Thu Phong assumed growth of building materials price had surpassed that of inflation, putting property developers into a pickle.

“The first quarter consumer price index was reined in but the price of housing and building materials group soared as labour costs picked up 20 per cent,” said Phong.

Housing construction cost now averaged VND7 million ($330) per square metre, including VND3 million ($140) per square metre for frame construction, VND2.5 million ($120) in finishing stage and around VND1.5 million ($71) for interior, according to Phong.

Constrexim Housing Investment and Development director Nguyen Duc Cay said in 2011 building materials was up 34 per cent in price and manpower cost up more than 50 per cent while many properties remained unsold, pilling mounting pressures on developers. - Source: VIR

Cash tap opened for property

On schedule property projects can expect strong banking support.

A representative from Ninh Bac Finance Investment Corporation, developer of hi-end apartment complex FLC Landmark Tower in Hanoi’s Tu Liem district, said from this month homebuyers could borrow 70 per cent of an apartment’s value at Military Bank with 15-16 per cent interest rates for 10-20 years.

FLC Landmark Tower started handing over apartments to customers this month at VND23 million ($1,100) per square metre.

Indochina Plaza Hanoi (IPH) mixed-use development is also getting in on the act by handing over apartments to customers. Several banks like Vietcombank willingly finance homebuyers with lending up to 60-70 per cent of the apartment value from seven to 15 years.

Starting from April 11, BIDV offered loans for home purchases with interest rates ranging from 14.5 to 16 per cent which were 1.5 to 2.5 per cent lower than those before that date. BIDV is teaming up with the developer of Richland Southern serviced apartment project in Hanoi’s Cau Giay district to offer prospective customers credit lines up to 70 per cent of the property value.

In late March 2012, developer CapitaLand-Hoang Thanh’s Mulberry Lane apartment project in Hanoi’s Ha Dong district inked a cooperative deal with Standard Chartered in issuance of debit card Platinum Card with attractive incentives to the project’s prospective buyers.

Other banks such as VIB and OceanBank are rolling out lending packages for home purchases for completed and nearly completed property projects.

For instance, VIB is launching a ‘lending for home purchase’ package with credit lines up to 70-90 per cent of the property value in 180 months maximally.

At the Mulberry Lane project, VIB funds 65 per cent of capital contribution/home purchase contract values with the collateral being the apartment itself and 90 per cent of contract value with the collateral being other assets.

OceanBank is coming up with the package ‘lending for home purchases in new urban areas’ with loans up to 80 per cent of the home value in a maximum 120 months.

Similarly, HSBC just aired its plan to ease lending rates to personal loans with collateral earmarked to car or home purchases. At this point of time, HSBC’s most competitive long-term loan interest rate is pegged at 17 per cent, per year. - Source: VIR