Prices in the Hanoi real estate market, especially the high rise sector, are dropping, but have yet to attract customers.

 Mandarin Garden Project

Investors slash prices

Many projects by big investors such as Hoa Phat Group and Construction joint stock company No9 (Vinaconex), even in 'prime locations' are also being sold at discounts of 15-30%.

The Mandarin Garden's apartment complex was selling homes for VND45 million (USD2,160) per square metre in 2010. Now they are being offered at VND26 million per square metre without furniture or VAT. The project was thought to have great potential, but has only sold 110 out of 1,000 apartments.

Afterwards, other projects in the area also started to lower their prices. Prices at the Eurowindow Multi-complex were lowered from VND55 million per square metre to VND25 million with VAT.

Other unfinished projects have also reduced their prices. The investors have reduced the price of apartments in Discovery Complex in Cau Giay District from VND45 million per square metre to only VND27 million.

Discounts fail to attract

Despite the lowered prices, customers have not shown much interest.

Even though the price per square metre has been lowered, the total price of such an apartment can still be quite high because many of them are large.

Confidence in uncompleted projects is also low, with many fearing that they will end up losing on their investment in the long-term.

The fact that these apartments are being sold for less than the initial prices does not help in terms of confidence. Also, many fear high and sometimes unpredictable service fees, which can be VND10,000 per square metre, along with the VAT on their home.

Around 20 projects have lowered their prices and in 2013, real estate prices are expected to fall further.

Lacking capital, the investors may have to sell-off their projects in order to avoid defaulting on their debts.