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According to experts, this momentum will continue in 2020 and the upcoming years because the legal framework related to licensing new projects cannot be resolved overnight.
Property Insight – a multi-dimensional and in-depth information channel on the real estate market – in collaboration with CBRE Vietnam, recently organised the Property Insight – Residential Market Outlook for 2020 seminar. The programme provided investors, real estate developers, and homebuyers an overview of the domestic market in 2019 and forecasts for 2020.
High-end apartments leading price hike momentum in 2019
According to CBRE, Ho Chi Minh City’s condominium market in 2019 recorded a significant fall in newly launched supply. The city had more than 286,000 apartments in total by the end of the fourth quarter. Although the supply tends to decrease, the number of transactions has been continuously higher than newly launched units, helping to reduce inventory steadily over the years to 5 per cent last year.
|Experts agree that the Ho Chi Minh City real estate market is set for a mixed 2020, but there is still great potential for growth and development in the years to come.|
“This is a positive signal as customers not only buy new products but are also looking to buy products that have been launched before,” said Vo Huynh Tuan Kiet, associate director of CBRE Vietnam’s Housing Project Marketing. “Inventory in the market is now only 5 per cent.”
Last year also witnessed a new price level in all apartment segments, led by luxury products. The price of high-end apartments increased sharply in recent years, reaching an average of $6,308 per square metre in the last quarter of 2019, equivalent to a 10 per cent growth over the previous year.
|Vo Huynh Tuan Kiet, associate director of CBRE Vietnam’s Housing Project Marketing|
“The first projects launched in 2004-2009 cost only $2,000-3,000 per sq.m, but in 2018-2019, the market had many projects up to $10,000 per sq.m,” said Duong Thuy Dung, senior director of the Valuation, Research, and Consulting Department at CBRE Vietnam. “This is an important milestone marking significant changes in the price of high-end apartments.”
Challenges and opportunities for year ahead
Experts say that 2020 will be a challenging year due to the ongoing slow licensing and the tightening of credit into real estate. However, it is also an opportunity for investors who have already secured licenses.
Demand for condominium ownership continues to grow, driven by the hike in per-capita income as well as the rising interest from foreign investors. A recent report by global professional services firms ULI and PwC showed that Ho Chi Minh City ranked third in Asia in terms of investment prospects and leads the pack when it comes to real estate development prospects. In particular, the luxury segment continues to be attractive to investors.
|The Property Insight seminar attracted nearly 400 participants|
“Vietnam’s super-rich class is growing fast and they want to put money into land and real estate to avoid inflation. Apartments often have risks of deteriorating in quality and drawing declining profits accordingly. By contrast, the quality of high-end projects is guaranteed over time thanks to the management and operation by professional international agencies. That explains why high-end products are in increasing demand,” said economist Nguyen Xuan Thanh.
In fact, according to Andy Han, CEO of SonKim Land, luxury projects developed by SonKim Land at Thu Thiem area in Ho Chi Minh City’s District 2 are very popular and favoured by the market. Demand comes not only from domestic customers, but also from a large number of buyers from Singapore, Hong Kong (China), or South Korea. He predicted that this strong demand would continue for at least the next five years.
|Andy Han – CEO of SonKim Land and panellists at the seminar|
Limited supply and strong demand have continued pushing up apartment prices. In particular, projects located along Ring Road No.3 or those easily accessible by Metro Line No.1, or those in the proximity of Long Thanh International Airport are particularly sought after.
Experts agree that the Ho Chi Minh City real estate market is set for a mixed 2020, but there is still great potential for growth and development in the years to come.
“When we feel risk, we should buy. Today apartments are the cheapest because tomorrow prices will definitely hike. My advice is buying as soon as possible,” Andy concluded.
Episode 9 of Property Insight with the theme “Residential Market Outlook for 2020” attracted more than 350 customers and 15 media agencies. With practical survey data and relevant analysis, leading specialists in project development, operational management, and macroeconomy, have provided an overview of the 2019 market and made positive forecasts for the New Year. In particular, the high-end segment is set to prevail thanks to its appeal to buyers and impressively increasing price levels.