Last week, around 6,000 people entered into a lucky draw for the 580-unit Hoang Anh Riverview in Ho Chi Minh City’s District 2. Buyers backed themselves to purchase apartments starting from $2,200 per square metre
The new development is a stone’s throw away from the Vista which drew hundreds of potential buyers in a similar draw late last year.
Although the prices are a stark contrast with the country’s annual average per capita income of $834, Savills managing director Brett Ashton said it was not uncommon to see buyers vie for a house when the market was hot and there was little supply.
“I do not think it is abnormal,” he said. “Despite all the talk of more projects, the fact is that few developers are really launching sales and building at the moment.”
“Buyers are looking for good quality projects either for owner occupation, investment, and yes, some speculation. It is normal when good quality developments are rare,” Ashton added.
Condominium prices have gone up sharply. HAGL Land initially expected to sell Hoang Anh Riverview for $1,200 a square metre but the developer decided to lift prices as interest rose.
Condominium prices in the southern hub have risen steadily over the last couple of months. The Lancaster sold for $4,500 a square metre in the fourth quarter last year, Avalon for $4,300 and Saigon Residences $3,800 or 20-30 per cent higher than the second quarter. The Vista sold for $1,350 in the second quarter and is now going for $3,200, according to CB Richard Ellis.
Housing prices in Hanoi are also rising by $200 to $400 per sqm over the last month. Happy House Garden in Long Bien district which drew little buyer attention a year ago is now capitalising on strong demand to go to $600 per square metre compared to around $400 two months ago.
Phan Truong Son, general director of Hop Phu Investment and Development Company, said the price increases were because of rising building material prices and housing shortages in the capital city.
Hanoi saw few new projects launched last year while grandiose development such as Ciputra International City and West Westlake were crippled by land compensation problems. In particular, Ciputra has not been able to continue construction of its second phase since the end of 2006 due to local residents protesting compensation plans.
Nguyen Thanh Quang, general director of Dragon Land, the developer of the 64-hectare Dragon City in Ho Chi Minh City, said housing prices were also on the increase because laws now require developers to finish construction of housing foundations before starting sales leading to developers’ higher initial investments.
Dragon Land has yet to start selling but is drawing strong buyer interest as it is located next to the Phu My Hung, a successful township development where a villa can fetch as much as $3,800 a square metre.
Last year saw a surge in real estate investment, particularly into the construction of townships and residential high-rises, which are expected to improve supply this year and next.
Singaporean developer Keppel Land has entered into joint ventures with Tien Phuoc Company for the development of 1,500 apartments in District 2, with Tan Truong for 2,400 apartments in District 7 and An Phu Corporation for 1,940 units in District 2.
Keppel Land is also clearing sites and working on development plan for Saigon Sports City, an integrated township with 3,000 apartments in District 2. The developer claims it is well on the way to building around 25,000 homes in Vietnam.
Another Singaporean developer, CapitaLand, has also set up joint ventures to build 600 apartments in District 7 and 1,200 apartments and 300 villas in District 9.
Korean developers are moving en masse, building such projects as the Mark with 2,040 apartments in District 7 and GS Metro City on 349 hectares in Nha Be district.
Local developers are going on a new height with bigger developments such as the 1,340-apartment Richland Hill and 4,000-apartment Phu Hoang Anh in District 7.
Many of these projects will start sales this year but market observers do not expect housing prices to ease.
Ngoc Son (vir.com.vn)