A seven percent y-o-y increase in luxury condo prices expected this year
View towards the HCMC center and Ben Thanh market. Phong Vu Hong/Shutterstock
Vietnam is one of Southeast Asia’s economic growth engines. With foreign direct investment (FDI) at an eight-year high, especially from Japan, Singapore, and South Korea, and vigorous GDP growth rates, the country is a remote simulacrum of its formerly war-torn self, despite concerns of a real estate bubble.
Never is this sentiment more bullish than in Ho Chi Minh City, a condominium market that CBRE Vietnam calls “upbeat.” With 43,861 units due for launch this year in the metropolis, the city, Vietnam’s largest, will easily surpass last year’s launches of 37,419 condos. Around 1,627 of this year’s launches will be in the luxury segment or properties with primary prices of more than USD3,500 per square metre.
The absorption rate for luxury condos in Ho Chi Minh City this year is expected to coast at more than 50 percent as in 2016. Buoyed by new products with unique designs in prime locations, luxury condo prices are projected to jump by 7 percent year-on-year in 2017.
“Buyers are nowadays better-informed and more demanding, and they look for not only a home but also a community,” said Duong Thuy Dung, director of CBRE Vietnam’s research and consulting department. “On-time delivery is not enough; new projects should also have good facilities and offer a lively community.”
More: Will Vietnam blow a property bubble in 2017?
CBRE researchers noted that prices of luxury projects in HCMC are still low relative to other Southeast Asian markets. “This segment is still attractive to the local well-off as well as to foreigners, whose home ownership rights in Vietnam were considerably relaxed in 2015,” CBRE stated in its 2017 outlook for Ho Chi Minh City.
Although 35,008 units were sold in total in 2016, down 4 percent from 2015, the average sales price in HCMC last year increased 4.6% year-on-year to USD2,104 per square metre.
In Hanoi, midmarket units or those priced between USD800 and USD1,500 per square metre characterised a majority of launches (56 percent). However, two luxury projects were launched in the Vietnamese capital’s Westlake area. Overall, 30,000 new condos were launched in the city in 2016, with 21,188 units in sales by the end of the year.
Around 13,000 new high-end units or those in the price range of USD1,500 and USD3,500 per square metre will also be launched in HCMC, but CBRE surveyors are cautions in this regard. “It should be noted that an increasing interest rate, the announcement of circular 36 and the end of the VND30,000 billion house mortgage package will reduce demand and sales momentum in the middle segments,” CBRE stated in its report. “Improvements in infrastructure continue to support first-home buyers by providing easier connection between the CBD and suburban districts.”
Read next: The ultimate guide to SE Asian real estate in 2016
Source : property-report.com
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