Miss Regina Lim, director of the equity market division of JLL Real Estate Consultancy Company, said that confidence in Vietnam’s economic growth has helped revive investment in real estate from 2013.
In addition, the policy’s changes are implemented in July 2015 which have created conditions for foreigners to own real estate in Vietnam to become more open, promoting the housing transactions to increase. In 2015, investors have sold about 24,000 units and in the first half of 2016 is 16,800 units, up nearly 250% over the period 2011-2014.
Ms. Lim said that Vietnam’s housing supply is expected to increase by 74% in the next three years, but the absorption capacity of the market will still increase.
Although the number increase strongly, luxury apartment’s prices rose only 9% in the last 6 quarters. This contrasted strongly between 2005 and 2007 when prices rose sharply to 106% of foreign investment in Vietnam with predictions about the recovery of the economy and the real estate market. Price has been adjusted about 30% during the past seven years from mid-2007 to 2014, resulting in high-end apartments priced at $ 2,180 / sqm with 24% below the peak in 2007.
According to Lim’s forecast, in the next three years apartment’s prices will increase by 5-7% per year, affordable apartments are likely to increase by 10% per year. Ms. Lim said that the apartment’s price is still moderate compared to income.
“Based on the monthly income of the top household group is $ 1,337, private apartments are at the affordable price of about 3.9 years of income. This number is 30%, lower than the average of 5.7 years in comparison with other Southeast Asian cities, “Lim said.
Ms. Lim added that the developers said they earned 25-30% of earnings before interest, taxes, depreciation, and amortization on high-end and mid-end housing projects.
JLL estimated that Singaporean investors have invested $ 1.2 billion in real estate projects in HCM City over the past two years, mainly focusing on housing development.
It is known that the total value of property owned by Mapletree Group in Vietnam has reached more than $ 1 billion, of which more than $ 400 million is invested in the Kumho Asian Plaza project (July 2016). In addition, CapitaLand has invested more than $ 400 million in Vietnam, including the first sale of this investor to develop a residential area located in District 1, priced at dollars 51.9 million.
JLL said that capital investment in Vietnam’s manufacturing sector has grown significantly in the past five years, thanks to lower costs than China. Specifically, the average export turnover increased 16% per year from 2011 to 2016, compared with China only reached 6%. In 2016, falling inflation, deposit, and lending rates reduced by 5% and 8.5%, to make the investment environment more stable.
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