According to a quarterly survey on the capital city's property market conducted by property services firm Savills Vietnam, secondary asking prices decreased in all districts, down 9 perent from the previous quarter in Tay Ho District, 6 percent in Cau Giay, and 5 percent in Hai Ba Trung.

The declining values were also related to such key factors as infrastructure development and construction progress of each project, Savills said.

End users were now the main buyers in the apartment market, which investors largely abadoned this quarter due to the market's low liquidity. Developers have also taken to offering shell apartments to further reduce the prices offered to buyers, said the head of Savills' research division, Do Thi Thu Hang.

CB Richard Ellis Vietnam's third-quarter report on the Hanoi property market showed similar trends.

"Secondary asking prices continued to drop by 5 percent quarter-on-quarter to an average of about US$1,730/sq.m, following a downward trend that started in the last quarter of 2011," said CBRE executive director Richard Leech.

"Looking ahead, in the current buyer's market, the buyers' purchasing power and mentality will drive the market recovery," Leech said. "A dim economic outlook through to 2013 will further dampen buyer confidence, and the flight to safety will strengthen savings at the expense of investments. Cash is available, but does not flow into real estate. Consequently, the market is expected to pick up when the economy shows clear signs of improvement."

Tran Nhu Trung, deputy director of Savills's Hanoi branch, said the trend of falling prices since the third quarter of 2011 had caused most investors to change their business strategies.

Leech agreed that business restructuring had been taking place as developers were faced with the challenges of outstanding debts and stagnant demand, and a number of local corporations with non-core competencies in real estate were exiting or looking to exit the market.

Developers have been revising business strategies in terms of target customers and types of products offered, putting greater efforts into sales and customer service and showing a willingness to compromise on prices and payment structures, he said.

"Looking forward, restructuring businesses and revising strategies would be a main focus to most developers in the next two years, as the market now demands better products at more reasonable prices," he said.

Knight Frank, a foreign property services company, has predicted that prices on the Hanoi apartment market would continue their downward trend through the final quarter of the year.

The mid-end and affordable segments were recognised as the segments with the highest demand, with end users expected to keep playing the primary roles in the apartment sales market in the fourth quarter.

To save themselves from difficulties down the road, a few developers have planned soft launches for their next projects to test the market and to try to boost sales with ongoing promotion campaigns.

Some local developers expect to settle for smaller profit margins in order to offer apartments at more affordable prices, including smaller units at prices of less than VND15 million (US$718) per square metre.

Some have joined social housing programmes or sold entire residential buildings to government agencies or to major companies looking for accommodations for their employees.

Source : VNS/VOV online