>> Real estate firms slash prices to remain in business

>> Property firm slashes apartment prices to ease loan pressure

Many people suspect that PetroVietnam Power Land JS Company (PVL)’s recent discount on apartments in their recently completed project is a trick to attract customers, not to repay bank loans.

PetroVietnam Landmark project

The company last week announced it intended to lower the prices of 85 apartments in its PetroVietnam Landmark project to VND15.5 million (USD741.62) per square metre from a previous VND21.6 million (USD1,033) because it needed to begin repaying a VND100 billion (USD4.78 million) loan from the Lien Viet Post Joint Stock Commercial Bank.

Due to high demand, with many people thinking it offered a rare opportunity to own cheap housing, the company organised a lottery due to the huge demand.

PVL initially claimed it would suffer VND70 billion in losses if it was forced to sell the 85 apartments at the new reduced price, but the company appears to have been more interested in stimulating interest than recouping capital, as only 25 apartments were offered in the lottery.

PVL also announced that if out of the 25 successful lottery winners, five offered a minimum price of VND15.5 million per square metre, it would cancel the results and registrants would have to take pick up lots again. This would means that only five apartments would be sold at VND15.5 million per square metre, while the rest would still only be available at higher prices.

Saigon Mekong Company followed suit and also said it would reduce prices on 500 apartments in the An Tien Project in Ho Chi Minh City. Prices would drop from VND18 million per square metre to VND14.5 million (USD693.8) per square metre. The company said the move was an attempt to recoup its capital and repay bank loans.

However, the company may not have to incur losses with offered prices of VND14.5 million per square metre as this is a common level for medium-graded apartments in Ho Chi Minh City districts of Nha Be, Binh Chanh, Thu Duc and Tan Phu.

Professor Dang Hung Vo, Former Minister of Natural Resources and Environment, said the two companies may make lower profits if they slashed apartments prices, but would probably not suffer losses, because it was normal to reduce prices in a depressed property market.

Deputy Director of Dat Lanh Company Nguyen Van Duc claimed that up to 60-70% of property projects had been delayed or were waiting to be transferred to other investors.