Developing real estate market in Q3 / 2017

HCMC real estate grew in line with the overall economy

As noted by Savills Vietnam, in the third quarter of 2017. GDP growth of the city reached 6.4%. And it is expected to reach 6.7% growth by the end of 2017. Not only that, high credit growth has also boosted the economy. By the end of the third year 2017, the number has increased by 11% over the same period last year and is expected to reach the target of 21% by the end of the year.

Also in the third quarter of 2017, foreign direct investment (FDI) into Vietnam was $ 25.5 billion. Of that amount, realized capital was about $ 12.5 billion, up 13% year on year. South Korea is the country with the highest registered capital of $ 6.3 billion. And Ho Chi Minh City is leading the localities in our country with the reception of registered capital up to $3.7 billion.

Ho Chi Minh City received the most foreign direct investment capital

Retail space is also increasing

Total retail space in the area is nearly VND1.2 million/sqm with 14,600 sqm new from 4 supermarkets and a base has just come into operation. There is also a closed project and a purpose-built project that reduces the loss of 6,500 sqm.

The average rent was stable, but the occupancy rate decreased by 1 percentage point. The rents in the CBD increase due to the presence of many well-known international brands. The out-of-town area has lower rental capacity, as the policy of selling is unattractive and the supply is excessive.

Buyers are now geared towards affordable products and personal service. Technology also increasingly affects the behavior of consumers. Therefore, smart applications need to be applied quickly to marketing and to enhance the shopping experience for customers.

The type of office for rent

With 5 new projects from all categories, total supply to the market increased 4% quarterly and 8% year on year. The current office area is over VND1.7 million/ sqm. There are 4 C-class projects closed to lose 15,000sqm. Demand remained relatively good despite new supply. Average occupancy remained high at 95%. Average rents increased slightly by 2% quarter-on-quarter and 7% year-on-year.

Consumption in this quarter mostly came from high-end projects A and B and new projects. Of those, Category B has the best performance with rents rising steadily each year.

Office for lease will develop strongly in Ho Chi Minh City. As this city will increasingly develop knowledge economy

Serviced apartment supply

Balancing supplies from 1 new Grade B project, 1 Grade C project, and 2 Grade C projects withdrew from the market. The supply for the market increased by 223 units. Raise the total supply of apartments in the market reached 4,900 units, increasing by about 5% quarterly and 9% year on year.

The average occupancy rate tends to decrease slightly. But overall still pretty stable. New supply in Grade B has an impact on consumption, while performance in Grade C is slightly down. Average rent increased by 3%. By the end of the year, more than 200 new apartments are expected to enter the market. From the end of this year to 2019, the serviced apartment market will receive 1,500 units from 11 projects. Of these, six project are located in the CBD.

Hotel

In the 3-star segment, a hotel with 64 new rooms entered the market and a hotel is temporarily suspended for room upgrades. Total supply in the market has 133 projects with over 16,400 rooms.

Segment 4 and 5 stars have improved significantly, resulting in an average room occupancy rate of 66%. Average room rate is $76 / room / night, stable compared to last year. This price point indicates that the market has increased competition in all segments.

In all segments, innovation is needed in the room to keep up with the growing competition due to too many projects

Grade A apartments

13 new projects will be built and the next openings will have 16 existing projects. Provided more than 11,000 apartments to the market. Supplies for primary units were 35,000 units, down 2% quarter-on-quarter and 11% year-on-year.

Trading volume reached 11,500 units, slightly down quarterly. Of these, new projects accounted for 32% of total market transactions.

On the wings of apartments A and B have good business situation. Grade A apartments achieved 550 deals, an increase of 149% on a quarterly basis. Market absorption was 32%, up 13 percentage points year-on-year. From the end of this year to 2018, 70,000 apartments from 60 new projects are expected to hit the market.

Townhouse service

5 new projects and the next open sale phase will have 1 more existing projects. Offering over 750 units, the primary stock will be at about 2,000 units, up 3% on a quarterly basis. The number of transactions increased by 34% on a quarterly basis, but decreased by -9% year on year. Market absorption was 55%.

District 9 continues to be the market leader with 43% market share. Primary supply of land approximately 1,300 with area from 50-80sqm, Cu Chi is the first time leading this transaction.

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