VIETNAM REAL ESTATE MARKET PROSPECT in 2021
❖ HO CHI MINH CITY APPROVE 2,800HA TOURIST URBAN PROJECT IN CAN GIO DISTRICT
On February 23, 2021, the People’s Committee of Ho Chi Minh city issued a decision on detailed planning of tourist urban area in Can Gio district with 5 main subdivisions that focus on amusement park, entertainment area (theme park, golf course…), high-class tourism and resort, residential area (connecting houses, villas, apartments), trade and service. Services, offices, hotels, mixed-use areas and national security and security are arranged synchronously and fully with social and technical infrastructure works
❖ Thu Duc city – the new focus of the real estate market
Thu Duc City was formed with many expectations from both the government and the people. In fact, people are willing to move much longer distances than before, to find a home in a well-planned area, with professional management, full facilities and utilities, and more importantly, more affordable, thanks to long, flexible payment terms and links with banks. Foreign experts or Vietnamese business people often choose to live in residential clusters with many high-end projects such as Masteri Thao Dien, Masteri An Phu or Estella An Phu in District 2 (Thu Duc city) because this area is also concentrated many international schools, accounting for 25% of the total number of international schools in Ho Chi Minh City, meeting the demand of higher quality and international education.
Highlighted projects
❖ Kick-start Long Thanh International Airport Project
On January 5, 2021, the construction of the Long Thanh international airport project phase 1, total investment of 4.665 billion USD (109,111.7 billion VND) officially started, is expected to complete phase 1 in 2025 (including the following projects: a runway of 4,000m long and 75m wide and a taxiway system; a passenger terminal with a capacity of 25 million passengers/year (total floor area 373,000m2) and 1.2 million tons of cargo/year).
Sources: VNREA
❖ Optimistic progression of Metro Line 1 (Ben Thanh – Suoi Tien)
Metro line 1 (Ben Thanh – Suoi Tien) started the construction of power supply items throughout the system, marking an important milestone of the project when getting closer and closer to the test operation of equipment and running
As of mid-February 2021, the total volume of the whole project reached 82% (up 12% compared to 2019). Although not meeting the target of reaching 85% of the overall volume in 2020, but in the context of the heavy impact from the COVID-19 epidemic, this is a positive signal. Due to the impact of the epidemic, many jobs have not reached the set schedule, such as delays in procurement, production, transportation from abroad, and entry of experts.
Sources: VNREA
The Property Market
❖ The Southern Areas
The land sector in Ho Chi Minh city and neighboring areas such as Long An, Dong Nai, Binh Duong and Ba Ria Vung Tau have made significant increase in consumption volume of 1,146 units in first quarter of 2021 (137% compared to Q4 2020), up to 88% of total open supply. Long An is definitely a gem in the sector as occupancy rate reached up to 90%. Ho Chi Minh city recorded no new supply in the sector, transactions on the current market mainly focus on inventory sources of projects opened for sale in previous years or land of small-scale households divided by individuals to separate plots for sale. In apartment sector Ho Chi Minh, Dong Nai and Binh Duong are known for their massive flow of FDI, therefore, the occupancy rate for apartment are 77.2%, 94.7% and 75.5%, respectively.
Sources: DKRA
Long An rose to lead the market in terms of land supply and consumption of the whole market in the quarter. HCMC, Dong Nai and Binh Duong accounts for most apartment consumption rate in the areas. Dong Nai apartment market has attracted the attention of investors with a newly open for sale project in Bien Hoa City, accounting for 20% of total supply of HCMC and other neighboring provinces. The secondary market did not have much volatility, market liquidity was average, and the price level did not increase significantly. Land plot continues to be a sustainable profitable investment channel with a good price increase margin for investors in the long term.
❖ Northern Areas
Besides Hanoi – The group of provinces/cities that were evaluated positively and vibrantly attracting a lot of attention from investors, including: Quang Ninh, Hai Phong, Bac Giang, Vinh Phuc, in such:
Quang Ninh
Quang Ninh at the end of the year has a good absorption rate in the following projects: Phuong Dong Van Don urban area, transactions reached 950 units, equivalent to 75% of each sale; Ruby Ha Long apartment transaction reached 220 products, 70% absorption rate. ALAKAS Quang Ninh luxury apartment project started to offer to the market. The total number of transactions in the province will reach nearly 3,000 units for 2020. The announcement of the planning of Van Don economic zone will certainly improve the Van Don real estate market in 2021.
Bac Giang and Vinh Phuc
Maintaining strong industrial real estate activities, land real estate prices are still at an average level, so they continue to attract good investment demand. The most vibrant area in Bac Giang is the Viet Yen Region, in 2020 there are about 1500 successfully transaction.
Hai Phong
The newly open highway Hanoi – Quang Ninh has accelerated the real estate market in this province. Breaking through rapidly, the projects of VinGroup, Hoang Huy and Japanese real estate development groups are getting the attention of investors coming to Hai Phong.
Ha Noi
In the first quarter of 2021, Hanoi market recorded approximately 4,400 new apartments for sale. Although this new opening decreased by 39% Q-o-Q due to the disruption of the Tet holiday and the new wave of Covid-19 epidemic, this represents a 270% increase year-on-year indicating a strong recovery in the market, if compared to Q1 2020 when the Covid-19 epidemic started breaking out in Vietnam. Most of the newly launched supply in the quarter came from the subsequent sales of already launched projects (14 projects) and only 3 projects were launched for the first time. By segment, mid-end apartments continued to be the most popular product in the market, accounting for 80% of the total new sales this quarter. In terms of location, the East and West continue to be the two main areas where new projects are concentrated, accounting for 77% of new supply in total.
*Luxury: >US$4,000/m2; High-end: US$2,000 – 4,000/m2; Mid-end: US$1,000 – 2,000/m2; Affordable: < US$1,000/m2
Selling price on the primary market in Q1 2021 was averaged at $1,461/m2 (excluding VAT and maintenance fees), up 7% Y-o-Y and 3% Q-o-Q. The supply of apartments for sale on the Hanoi market is still continuing to focus on the mid-end segment, while limiting the supply from the remaining segments. The price volatility of other segments is highly dependent on the price level of newly launched projects. Accordingly, because the new projects launched for sale in this quarter are in a more favorable/convenient location than the projects opened for sale in the previous period, causing the prices of the high-end and affordable segments to increase by 9% and 5%, respectively.
On the secondary market, a number of high-end projects recently completed in developed residential areas such as Ba Dinh, Cau Giay, Nam Tu Liem recorded a positive price increase of 3-7 months year-on-year, while the average price of the whole region (including projects that have been completed for a long time) ranges from 1-3% annually. In addition, projects located near areas with near-complete infrastructure such as the area along the Vanh Dai 2 road or areas with positive information about planning, such as in the area of Long Bien district, recognize a price increase of 5 – 9% year on year.
New supply and sales in 2021 are expected to range from 24,000 to 26,000 units. In the coming quarters, it is expected that many housing projects and urban areas will open for sale in many different areas in Hanoi, both in the inner city and suburban districts, helping to make the market more vibrant. The average selling price in the primary market is expected to increase by 4-6% in 2021. Ms. Nguyen Hoai An, Director of CBRE Vietnam – Hanoi Branch said that “Active construction activities are taking place in many areas. different types of real estate and in many different areas in Hanoi signal a strong recovery of the city’s real estate market. We expect that not only the residential real estate segment but also the commercial real estate segment will also welcome many new projects with the development participation of both foreign and domestic investors from Vietnam. the southern area”.
Hebronstar Insights
Tham Huy Truong/ Research Analyst
