Real estate market in the first 9 months: Hungry and rising

Hunger, rising prices are the common story of the real estate market at both ends of the country in the third quarter, as well as the first 9 months of this year.


The land-attached housing segment in Hanoi has a higher supply than the HCMC market. Photo: Thanh Huyen


Apartment market, HCMC is superior


According to JLL Vietnam, in Ho Chi Minh City market, the number of apartments officially launched in the third quarter reached more than 17,000 units, an increase of 110% compared to 8,086 units launched in the third quarter of 2018. However, this sudden supply mainly came from Rainbow subdivision, Vinhomes Grand Park project, District 9 when this project contributed more than 10,000 products.


With the exception of this, the new supply in the market is generally limited, reaching less than 7,000 units, mainly due to difficulties in licensing new projects.


Meanwhile, due to the great demand of the market, the liquidity in the third quarter was higher than the number of newly launched units. Specifically, in the quarter, HCMC market had 17,248 successful transactions, coming from 14 projects. In particular, the large-scale project Vinhomes Grand Park accounted for 60% of quarter sales.


According to JLL, this mid-end segment project has been introduced to the market since the end of 2017 and attracts good buyers thanks to its effective sales strategy. As a result, more than 10,000 units were sold out when this project was officially signed a sales contract in the third quarter of 2019. Mid-end projects with transaction prices from 1,200 - 1,700 USD/m2 attract the most buyers.


A project on Nguyen Van Huyen street lasted in Hanoi


Not difficult to recognize, the country's largest market is being "rescued" thanks to the large project of Vingroup: both in supply and liquidity.


Although the supply increased sharply, but mainly due to a local increase due to a project, while the overall supply of the market still declined, so the price is still pushed up.


Specifically, the average primary price of the whole HCMC market reached US $ 2,067/m2, up 23.8% year on year. In particular, the high-end segment reached a new price level, at 5,320 USD/m2, up 64.9% year on year. This price increase phenomenon is largely explained by the scarcity of new supply. The primary selling price per project increased by an average of 20.6% year on year, mainly driven by the high price segment.


Meanwhile, the Hanoi market in the third quarter of 2019 is not as positive as Ho Chi Minh City. Specifically, according to CBRE Hanoi, in the third quarter of 2019, the Hanoi market had nearly 6,100 apartments offered for sale from 18 projects, down 33% from the previous quarter, but not too bad when compared to the recent figures. 5,000 units opened for sale in the third quarter of 2018.


The projects located in the Western region accounted for about 77% of new supply and new supply in the quarter. Notably, the Hanoi housing market shows a tendency to expand beyond the CBD with new projects emerging in Thanh Tri and Hoai Duc districts.


Not only sharply reduced the supply, but also the liquidity of the Hanoi market fell sharply. Specifically, in the quarter only 4,800 apartments were successfully traded, down 32% compared to the previous quarter and only equal to 78% of the sale, while this figure in the HCMC market was 101%.


Regarding the price, in the Capital market, the primary selling price was stable in the third quarter of 2019 on average at 1,337 USD/m2, up 4% over the same period.


Territorial market: Hanoi is ahead


While in the apartment segment, the Hanoi market is somewhat inferior to the Ho Chi Minh City market, in the housing segment associated with land, the Hanoi market appears to prevail.


Specifically, CBRE statistics show that, in the third quarter of 2019, Hanoi market had 879 new launches. Sales are also very positive with 873 successful units, up 3% QoQ and 67% YoY. In particular, the total number of units sold in 9 months of 2019 recorded at 3,853 units, 1.5 times higher than the whole of 2018.


Meanwhile, in the Ho Chi Minh City market, the number of new launches reached only 264 units (mostly adjacent houses), most of which came from the subsequent phases of existing projects. The low supply led to the liquidity of this segment only reached 229 units in the third quarter. This is a record low since the market recovered from 2014.


According to JLL, the demand continues to be very strong for mid-sized terraced houses with prices ranging from 170,000 to 250,000 USD/unit (equivalent to 4-6 billion VND/unit), focusing on the demand to buy at or investing expected profit of the resale difference.


In terms of price, due to scarcity of supply, Ho Chi Minh City market has a stronger increase in prices than the capital market.


Accordingly, in the third quarter, the average villa price in Hanoi in the secondary market reached 4,157 USD/m2 (including VAT and construction costs), an increase of 2% compared to the previous quarter and 4, 2% over the same period last year.


Meanwhile, in Ho Chi Minh City market, the primary selling price (average of both adjacent houses and villas) reached US $ 4,689/m2, up 20.2% year on year.


According to JLL, the fact that new projects are limited in both apartment and townhouse segments, together with existing projects with good development quality, explains the phenomenon of increasing primary prices in the home market. In other words, the shortage of supply of apartment segment has contributed to pushing demand and prices in the residential segment to increase when more investors "change".


What is happening?


Talking to the report of Real Estate Investment Newspaper, Ms. Do Van Anh, CBRE Hanoi Market Research Department said that in both apartment and land-attached housing segments, the Hanoi market is currently Depends heavily on urban projects. This will last until at least 2020, when urban areas will still provide the majority of the market supply in these two segments.


In addition, the market is attracting the attention of many foreign investors, mainly from South Korea, Taiwan (China), Hong Kong (China). In particular, the western area of Hanoi attracts the attention of many foreign guests, many projects have sold out their foreign room. This is a good sign, a bright spot of the apartment market over time.


Meanwhile, in Ho Chi Minh City market, JLL Vietnam said that the demand and price increase will mostly be positive in popular and mid-end projects. Meanwhile, the high-price project will continue to witness a decline in demand, especially in investment demand. The main reason is that the rental performance and the prospect of resale profit margin seem less attractive, in the situation of high prices being recorded.


In the land-attached housing segment, the likelihood of sales in the whole year is only about 2,000 units, half of that in 2018. Like the apartment segment, a large amount of future supply in the year 2020 of this segment will depend on two large-scale projects, GS Metro City in Nha Be District and Vinhomes Grand Park in District 9. Thanks to good buyer psychology, the majority of existing projects will continue to increase prices, especially in the affordable and intermediate housing segment.


According to Thanh Huyen