Launch Of Many Low-Cost Housing Projects In The Second Quarter

In fact, the real estate market in HCM City now shows that developers have started to move in project development. In particular, the reduction of high-end projects, the development of low-cost and mid-priced projects with large market demand are the options offered by many investors. Specifically, the dropping point of low-cost projects will be in the second quarter as many businesses said they would launch projects during this period.

Cheap houses occupy the supply

Mr. Dang Hung Vo, former Vice Minister of Ministry of Natural Resources and Environment, said that the overall picture of HCM City’s real estate market showed that one of the things that started the business was the shift in product development. In particular, from the year 2014 backward, the market is mainly high-end apartments, but from 2015, this market appears more middle-class and cheap projects.

“In 2014, data from the Housing Management and Real Estate Market – Ministry of Construction shows that the total supply of apartments in Ho Chi Minh City is 14,522 units, 25,560 units in 2015 and nearly 24,000 units in 2016. In particular, data show that in 2014, high-priced apartments accounted for 45%, average prices accounted for 28% and low prices accounted for 27%. In 2015, high-priced apartments accounted for 40%, the average price accounted for 35% and low prices accounted for 25%.

By 2016, high-cost apartments accounted for 31%, average prices 49% and low prices accounted for 20%. Thus, in Ho Chi Minh City has moved when the group of cheap apartments always accounted for over 20%, high-priced apartments and average prices accounted for less than 80% and the trend of increasing the proportion of cheap housing is very clear. Thus, in HCM City, the apartment market is heading for medium and cheap price groups”, Mr.Vo said.

The Cat Tuong Phu Sinh project is priced at VND 400 million per unit, which is considered to be the focal point of the North West HCMC land project.

At the beginning of 2017, according to the report of Real Estate Investment reporter shows that the real estate business in HCM City continues to devise policies to develop low-cost and mid-range projects. For example, the D-Vela apartment project with 169 apartments of Dream House, Phu Hoi urban area, Truong Luu residential area of Kim Oanh real estate, Him Lam Phu An with over 1,000 apartments. Him Lam Land or Hung Thinh Corp will launch 10 medium-scale apartment projects with a total of nearly 6,000 apartments.

The prices of these projects are considered suitable to the needs of the majority when only about $435 – $870/sqm in districts such as District 8, District 9, Thu Duc, District 7, etc. Especially, a new subdivision is expected to provide thousands of affordable apartments for HCM City, which is West with projects of Novaland, Hung Thinh and so on.

Looking at the market overview, low-cost projects are mainly developed in some areas including plenty of low-income residents, such as Binh Tan, Tan Phu, District 9, Thu Duc, Binh Chanh. These are high population densities, land funds and high demand for affordable housing.

Mr. Nguyen Nam Hien, General Director of HungThinh Land said that the real estate business moving from high-end to mid-range and low-cost real estate is a well-researched strategy. The business has looked at the real demand of the market which is the demand for housing of people in Ho Chi Minh City that is always high, but the number of people with housing needs is mostly low-income people, so the development of projects Low prices for low-income people is the right direction.

Demand for cheap houses is huge.

In addition, Hien also said that the development of low-cost projects is in the development orientation of the city when these projects are located in the suburban districts, the development is part of the plan to expand the population of HCMC.

“In fact, there is still demand high-end apartments of high-income people, so Hung Thinh Land’s projects have always developed high-end apartments for high-income people and apartments with an average price for middle-income people. This is the specific policy that our company built to develop the project because I think the second quarter will be the period of the average and cheap apartments, “said Hien.

Economic expert Nguyen Tri Hieu said that the average income in Vietnam is $ 2,000 per person per year, of which Hanoi is $ 4,000 per person per year, in HCM City is $ 6,000 per person per year. Demand for affordable housing in Ho Chi Minh City is very high, especially for large numbers of people with an average income of around $ 440 per person per month, it will never be enough to buy apartments. Therefore, the real needs of the people are to buy cheap housing, this is a great way for real estate business to grow.

“Enterprises need to set lower profit targets, more people. In addition, the State should pay attention to the supply-demand gap in the apartment market in order to have appropriate policies, help businesses peace of mind to develop cheap projects for people, “said Hieu.

No shortage of land funds

A total of 21 projects launched by CBRE in the first quarter of 2017 showed a sharp fall in supply to 44% in comparison with the fourth quarter of 2016. However, this decline according to leaders of Vietnam Real Estate Association there are many reasons. Firstly, the first quarter is usually the period of restructuring of the real estate business after three-quarters of the market, in addition, the downward trend comes from the cause is the management agencies are tightening policy the development of new real estate projects.

This tightening can be seen from the fact that existing owners who want to apply for a new project license have to go through more than the Provincial People’s Committee, the Ministry of Construction or the Department of Construction. Department of Resources – Environment, Department of Finance, Planning – Investment, etc.

Enterprises need to set lower profit targets, more people

In addition, the development of land funds to open new projects of enterprises must also implement more stringent procedures when the Prime Minister asked the Ministry of Finance to move from land valuation to auction real estate project land.

Economic expert Nguyen Tri Hieu also said that businesses are also holding the land fund waiting for the development of the project. The land fund and development delays from the psychology are too many old projects have not sold out, in addition to dozens of new projects to create a market with a large supply of enterprises develop further new projects will create high compete and be difficult to sell at this time. In addition, if the land fund is scarce, if the land will be used for the project, the enterprise will suffer, instead of letting the land fund develop at another time, which will help the company to develop and sell the product at a good price with low compete.

Mr.Tran Quoc Viet, Chairman and General Director of Duc Hoa Cat Tuong Real Estate Joint Stock Company, said that his company currently has six large plots of land for development of the land plot. However, the market now is not suitable launching products. Therefore, Cat Tuong Duc Hoa still only develop Cat Tuong Phu Sinh project with a total area of over 100 hectares, when developed this project has just developed another project.

Mr. Viet’s predict is also a reflection of many other investors as the lessons of stretching too many “fronts” can lead to real estate investors. Slow down is probably the right direction in the context of increasing supply.

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