The market trend has moved up strongly since early this year, and the affordable home segment is expected to continue to dominate the market in the coming time, according to market observers.
Savills Vietnam has released a quarterly market research report saying market demand picked up in the third quarter of the year as it witnessed the highest number of apartments absorbed in the primary market at around 4,400 units, equivalent to the total absorption over the first six months of this year. The majority of these units were affordable apartments, accounting for some 80%.
In the past three months, the market has recorded average primary prices offered at US$2,041 per square meter for high-end apartments, US$1,550 for mid-end ones and US$773 for affordable ones.
According to Savills, the total primary supply of apartments in HCMC in the year to date has increased to a record of 16,600 apartments, nearly triple the same period last year. Twenty new projects with 7,200 apartments entered the market in the third quarter of this year, a strong supply compared not only to the previous quarter at 3,200 units and the first quarter at 2,900 units but also to the same period last year at 3,500 units.
CB Richard Ellis Vietnam (CBRE) has the same market review, saying the largest growing segment of the market is affordable homes as seen previously. Among the projects launched in the third quarter, none of them were in districts 1, 2, 3, or 7, thus reflecting the scarcity of reasonably priced land in these districts.
When asked about the trend towards the affordable home segment, Rudolf Hever, associate director of research and consulting for CBRE, says that as the local economy continues to grow, and incomes increase, there is pent-up demand from people who were previously priced out of the market.
Hever notes there has been a lot of action from the Government to support the residential property market, including measures to increase transparency and increase the availability of loans.
“All these efforts work together encouraging prospective home buyers to look at new and existing developments as a realistic option, and as these affordable projects achieve critical mass, the availability of facilities and amenities in these areas will increase too,” he comments.
Although the market moves toward the affordable segment, it has seen some high-end projects launched into the market, and some have made events to stir up the market. For example, the City Garden project on Ngo Tat To Street in HCMC’s Binh Thanh District was officially launched after a year of preparation for the project’s foundation construction. The project includes six blocks of 21 to 30 floors, with 927 apartments from one to three bedrooms, and penthouses.
The company hosted a launching event late last week, inviting some 450 guests to show its sales program for the first phase featuring some 450 apartments with prices ranging from US$1,830 to US$2,700 per square meter.
In another project, Binh Thien An Property JSC last week invited some 300 guests to its condo project named Diamond Island Sky Resort in HCMC’s District 2 for the company’s five-year anniversary celebration, as well as for the project construction update, ahead of next sales programs. Some 250 among 700 apartments in the project are offered at US3,500 to US$5,000 per square meter.
Market observers, however, say competition is starting to be felt within the market as luxury and high-end condominium projects closer to the city center are facing competition from villas and townhouses in suburban districts, such as districts 9 and Nha Be. Villas or townhouses in suburban districts can have the same quality to a condominium project closer to the city center, but come with land.
There are 26 projects expected to launch some 10,300 units in the next two quarters, and the market may see an additional 104,000 units entering the market in the next few years, from 2011 to 2013 and beyond, according to Savills.
The company projects a positive demand trend in the HCMC market, fueled by increasing disposable incomes, and growing migration to the city. However, apartment demand is expected to be strong in the smaller-size apartment segment.
Property experts reckon that although the local property market has gone flat since sliding into difficulty two years ago, it still holds potential for developers and investors thanks to the growing population that triggers huge housing demand in big cities like Hanoi and HCMC.
It is estimated that the population will increase to 10 million in Hanoi and 12 million in HCMC by 2030. If the housing standard of 15 square meters per capita is applied, the two cities will need some 160 million square meters of housing to meet for the demand
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