Looking back on HCMC real estate market in Quarter 2/2018

Quarter 2/2018, the real estate market in HCMC has flourished with over 14,400 transactions, up 6% quarterly and 22% year on year.

16 new projects and 10 existing ones, providing the market with about 10,600 apartments

According to a recent report from Savills, in Q2/2018 in HCMC has 16 new projects and the next phase of 10 existing projects providing about 10,600 apartments, an increase of 125% year on year. In aggregate, primary stock was over 25,400 units, down 11% quarter on quarter and 30% year on year.

In terms of performance, the market recorded a gain of more than 14,400 transactions, up 6% quarter-on-quarter and 22% year-on-year. Of these, class B (middle) has a good trading volume, up 16% on a quarterly basis and reached an absorption rate of 61%. Class C (low grade) still dominates with 60% market share, absorption rate is 56%, up 9 percentage points quarterly and 24 percentage points year on year.

Longer-lived, it is predicted that by 2020, more than 129,100 units from 97 projects will be offered to the market. Particularly, District 9 will occupy the largest market share with 31%.

Regarding serviced apartments, the total supply in the period reached 5,300 units, up 3% quarter-on-quarter and 12% year-on-year, including 155 new units from 6 C projects and 30 new units from 1 B project. Compared to the previous quarter (1st quarter of 2018), the average capacity decreased slightly. As the performance of the market fell slightly, the Grade A (upscale) capacity went up 2 percentage points quarter-on-quarter while rents remained unchanged.

As noted by Savills, future projects from reputable developers and management will create pressure on the market. It is forecasted that in the second half of 2018, about 600 units from six projects will be launched, most of which are still high-end segments with good management.

About the real estate market in the first half of 2018, the period 2013-2017 has seen an average increase of about 9% per year in the segment of apartment market in HCMC. The deep analysis, high urbanization speed and solutions to boost infrastructure in HCMC have made a strong contribution to the overall growth.

A series of new policies have led to steady supply of apartments and therefore, the market is relatively stable without any significant oversupply problems.

According to Troy Griffiths, deputy managing director of Savills Vietnam, strong housing demand is likely to continue to grow until the end of 2018, especially when the market is looking for fair value to satisfy demand. Bridge owner to stay legal.

Accordingly, the new supply of apartments will increase significantly, affecting all segments and meeting the needs of all groups of customers. In general, the price of apartments in HCMC is still lower than other cities such as Kuala Lumpur or Bangkok, although the pace of development in HCMC is higher than these.

New supply of apartments will increase in all segments

Specifically in 2017, the price of high-end apartments in Ho Chi Minh City is only about 90% compared to Kuala Lumpur and approximately 20% compared to Singapore. The average selling price on a large scale of the market is expected to continue to increase but at a slower pace.

Selling prices are also associated with more quality development projects. In addition, demand for the housing market continues to increase sharply due to factors such as urbanization, the rapid growth of the middle class as well as the completion of new infrastructure in the near future.

Positive signs of the market in the second half of 2018

The real estate market in the second half of 2018 could receive a lot of “waves” as infrastructure in large cities invested by real estate is a planned product, transportation infrastructure, urban infrastructure.

Ho Chi Minh City has announced many new plans with radial roads, large roads. In particular, the areas of Thanh My Loi and Cat Lai have benefited from the impetus of infrastructure development, the real estate will be exciting and the price increases.

Condominium segment will continue to tend to be stable both in supply and demand. The projects approved by the city government authorities will come out next time. In particular, the structure of affordable housing will be promoted more to meet the needs of the majority of residents, high liquidity, the transaction volume is expected to be stable. High-end housing has not shown signs of cooling.

Condominium segment will continue to tend to be stable both in supply and demand

Meanwhile, the land market, with the project implemented in accordance with the plan will continue to develop as the original target. Especially, spontaneous land will be forced to “freeze” because of the policies promulgated clearly, self-violation of the law will have to bear the consequences, even land will be recovered to develop in accordance with planning local. In addition, demand for condotel condominium projects is generally good. However, it may reduce the amount of heat compared to the same period last year due to the difficult access to credit with higher interest rates.

Areas in Ho Chi Minh City is predicted to be exciting in 2018, Thu Thiem (the center of the East and Ho Chi Minh City), District 8 (promising to become attractive because it is connected to the central district , with lower price than District 7, District 9).

Besides, the real estate projects are located on Nguyen Van Linh, Nguyen Luong Bang, Nguyen Huu Tho and a series of streets in Nha Be district which is forecasted to break through in the South in 2018.

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