Saigon new condo supply lowest in 4 years
Sustained demand continued in the fourth quarter of 2019, yet its sales only halved of those in the same period of 2018, mainly due to limited supply caused by ongoing restricted approval procedures. For the entirety of 2019, citywide apartment sales totaled more than 30,000 units, albeit 35 percent lower than the peak year of 2017, still five to six times more than the 2012-13 downturn period. Mid-end apartment projects with a launching price of US$1,200-US$1,700 per square meter remained the top performers, accounting for 70 percent of units sold last year as they were situated in prime locations and offered a wide range of amenities, while still had plenty of room for price increase, which was attractive to both owner-occupiers and investors.
After an exceptional quarter with more than 10,000 units from the Rainbow phase of the Vinhomes Grand Park project being launched, the market returned to quiet mode with only 3,600 units officially launched in quarter four, a result of the prolonged approval process. For the whole 2019, official launches totaled nearly 30,000 units, which was 20 percent lower than 2018’s number and 30 percent below the peak year of 2017.
Dwindling supply pushed average prices in the fourth quarter last year to reach a new peak of US$2,880 per square meter, up 78.2 percent year-on-year and 39.8 percent quarter-on-quarter. JLL Vietnam pointed out the exceptional improvement in price was mostly driven by the majority of projects with lower prices were sold out, the basket was therefore left filled with projects listed at higher-than-average price. The second reason was that developers whose projects were launched in the quarter had more confidence in pricing given the tight supply. Meanwhile, the chain-linked rise by 22.9% y-o-y and 1.7% q-o-q, driven by sustained demand.
About 30,000-35,000 apartments are expected to officially enter the market this year, mainly contributed by Vinhomes Grand Park project. Though with the caveat that the number is subject to a great deal of uncertainty given the government’s lack of enthusiasm for granting land use rights and construction licenses. Strong demand is set to carry on and will boost the price further across all sectors. However, the demand in high-end segment, especially from investors, is likely to slow down in the long term as their already-high price level and low rental yield make it a less attractive investment, according to JLL Vietnam
Mid-end housing remains the major source of supply in the Hanoi market
In the fourth quarter of 2019, Hanoi’s apartment take-up totaled 7,429 units, still at high level though observed decrease from the last quarter due to the year-end holiday season. Although sales eased through the quarter, number of unsold units remained low at end-2019 amid limited supply, down 18 percent from last year. It should be noted that buying sentiment towards newly launched projects remained upbeat in the quarter, with Vinhomes Symphony in Long Bien District and Mipec Rubik 360 in Cau Giay District able to sell over 90 percent and 70 percent of the launching units within one week, respectively. Other than that, pre-sales rate of some new projects is increasingly supported by foreign buyers as local developers had ramped up their overseas marketing efforts.
Over 7,740 units were launched in quarter four last year, down by 8.2 percent yearly. In 2019, new launches totaled around 32,060 units, predominantly attributed to the mid-end apartments with 75 percent market share. The recently announced land base price policy to increase in the year 2020 has likely prompted developers to delay new launches with the view of higher selling price of their properties. Residential market remained the most active sector in terms of investment enquiries. Foreign development groups from across region particularly Japan, Korea and China continued to explore the development opportunities in prime locations as well as in surrounding neighborhoods.
The average price level stood at US$1,501 per square meter, grew moderately 1.5 percent quarterly. Mid-end segment was the best performer thanks to entrance of some new projects in good location and developed by reputable developers. Notably, the quarter witnessed one luxury project return to the market after a long delay with a soft – launching price at US$6,000–8,000 per square meter, an exceptional high price recorded in the city west area.
The residential market in 2020 is expected to see an influx of luxury apartments. An estimated 1,000 luxury units from four projects are set to be launched next year, accounting for nearly one third of the total existing luxury stock. Expected heightening prices combined with positive economic outlook will likely prompt buyers to rush to the market, thereby supporting transaction volumes.