Real Estate Market Is No Longer “Staging The Same Line”

The real estate market in Ho Chi Minh City in the second quarter and the first 6 months of 2017 have contrasting colors. The evolution shows that the market has been entering the development cycle in depth, towards the real demand.

Mid-range apartments lead the market

Survey results of real estate market in Ho Chi Minh City in second quarter of 2017 of CBRE Vietnam has just announced as forecasted by independent experts. After the quietness of the first quarter, the apartment market in the second quarter was vibrant again after investors have considered the strategy of selling and product evaluation.

Specifically, according to CBRE Vietnam, the number of new apartments offered and the number of units sold in the HCMC real estate market in the second quarter increased more than the first quarter with a total of 9,580 new offerings from 31 projects. This figure increased by 80% qoq, but still 7% lower than the same period last year.

Real estate market in 2017 is forecast to develop with many unknowns, in which the mid-range apartment segment will rise to the throne.

The notable feature of the apartment market is that the mid-end segment continues to account for the largest share of total new supply, accounting for 56%.However, in terms of growth, the segment of luxury apartments posted the strongest increase over the previous quarter with a 141% growth rate and will continue to increase in the second half of 2017 as many projects from reputable developers are launched. The popular segment rose 19% from the previous quarter to 1,575 units, while the luxury segment continued to remain quiet and there were no new offering projects.

Regarding the region, East has returned to the top spot, accounting for 36% of new supply. The West continues to record the number of units offered as high as 3,268 units, representing 34%, mainly middle-class apartments. This represents a trend towards the west of middle-class housing developers as more and more land is available, cheaper prices and improved infrastructure. Meanwhile, in the South, only 2,408 units are offered for sale in District 7. The North added a total of 486 units from a project in District 12.

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In the second quarter, the market also recorded positive consumption. Total units sold were 9,522 units, up 40% quarter-on-quarter and up 59% over the same period last year. Of which, the mid-market segment continues to lead the market with 4862 units sold, accounting for 51% of total consumption.

New projects sold in the quarter recorded 5,765 units sold, accounting for more than 60% of total consumption. Generally, new projects account for about 50% of the total sales of a quarter.

The average asking price was $ 1,578 /sqm, down 1% from the previous quarter, but up 9% over the same period last year. Offer prices dropped slightly as the number of new projects launched in the mid-end and low-end segment increased. Selling price improved in District 7 and District 10 from the second phase of sale of projects.

The real estate market in the last 6 months is expected to have fluctuations in each segment.

One notable feature of the second quarter is the tendency for foreigners to buy real estate in high-rise projects. According to CBRE, based on CBRE’s first half of 2017 transactions, foreign buyers are more confident and diverse. Foreigners accounted for 59% of the total number of successful transactions, with Singapore, Taiwan (China), South Korea and Hong Kong (China) being the most active buyers.

In terms of products, two- and three-bedroom apartments accounted for 38% and 37%, respectively. For the purpose of buying, the market is moving toward buyers. Residential buyers increased 9%, while buyers for rentals fell 19% compared to the first half of 2016.

In a more general perspective, the Ho Chi Minh City Real Estate Association (HoREA) reported that the city’s commercial housing market in the first six months of 2017 had 32 housing projects in place in the future. The Department of Construction confirmed the conditions for mobilizing capital, with a total of 16,506 (including 14,754 apartments, 1,752 low-rise buildings), with the total value of mobilizing up to $1,330,000.

Of which, the high-end segment has 5,164 units, accounting for 31.3%, the middle segment has 5.136 units, accounting for 31.1%, the popular segment has 6,206 units, accounting for 37.6%

Thus, the proportion of affordable apartments accounted for the largest proportion of 68.7% of the total apartments launched in the first 6 months. This is a good sign because investors and businesses have a strong product restructuring in the direction of increasing the number of small and medium sized apartments,  to meet the real needs of middle-income people, low-income urban people and high liquidity.

However, overall, the number of units offering decreased compared to the same period in 2016. In particular, although the segment of popular housing increased 1.9 times, the luxury segment increased 1.8 times, However, the mid-end segment dropped to 42.1%, with large developers specializing in mid-end housing projects that did not sell in the first six months of the year.

The home is still in sight

In the segment of land, townhouses, as recorded from the research units, and market reality, after the warning of HCM City leaders about the fake, The market has been strongly influenced the psychology of speculators.

The villa and townhouse segment has many projects that have completed infrastructure but are still delaying the sale.

Accordingly, the hunting of agricultural land or land plots for sale in the remote areas such as Cu Chi, Hoc Mon, Binh Chanh, Can Gio … to welcome the planning has cooled down. However, with the product line of land, townhouses, villas meet the real demand is still underway wave of transactions and prices are constantly increasing.

According to a survey by Jones Lang LaSalle (JLL) Vietnam, in the second quarter of 2017, the supply of townhouses and new villas launched to market was only about 1,381 units, up 3% compared with the previous quarter, But up to 40% over the same period, mainly supply from East HCMC. Meanwhile, sales of successful products reached 1,501 units, up 29% from the previous quarter and double the same period.

According to JLL, in 2017, the segment of villas, townhouses is expected to record a record supply of about 4,000 units and prices will increase by 5-7% per year.

According to the survey of CBRE, the real estate segment is still the focus of people with housing needs and investors. Notable projects to be launched in the second quarter of 2017 are Park Riverside Phase 2 in District 9 of MIK Group, Star Alliance in District 9 of Khang Dien, Lavila Phase 2 in Nha Be District of Kien A and Khang An residents in Binh Tan district of Khang An.

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At the existing projects, Cityland investors launched 100 new products from Cityland Park Hills project in Go Vap and Hung Phu Invest districts to add 100 products from Thang Long Home project in Thu Duc district.

By mid-2017, although the East still dominates the new supply market (68%), the market also saw new offers coming from different regions, including the emerging West ( Binh Tan District) with 13% of total new supply, the North and South respectively accounted for 10% of total new supply.

In 2017, the villa segment is expected to record a record supply of 4,000 units and prices will increase by 5-7% per year.

On absorption capacity, the whole market saw 817 products sold, down 6% from the same period last year and down 16% from the previous quarter, mainly due to a lack of new large-scale supply.

According to CBRE, due to the constraints on new supply, secondary market activity has become more active, especially for commercial townhouses and townhouses.

Secondary prices for recent built townhouses / commercial townhouses witnessed rapid increases in districts 2 and Go Vap; Prices for well-positioned products may increase by up to 30% during the quarter.

Big scale projects of large developers advertised in the previous quarters did not show signs of preparing to start construction in the quarter. Meanwhile, many smaller projects are being booked, as investors are trying to test the market, offering the best prices before the official launch of the next quarter.

From now to the end of the year, forecasts of large-scale projects will be kicked off in different areas of Ho Chi Minh City. At the same time, the products will be more diverse in different segments.

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