admin

Author's Posts:
Limited supply causing price hikes around Ho Chi Minh City

Suspended ventures due to lack of ­administrative procedures are instigating a severe shortage of supply and sharp increase of prices of the property market in Ho Chi Minh City, as well as in outskirt areas.

 

The government is being urged to provide more affordable housing and Ho Chi Minh City is looking to push forward stalled accommodation projects (Photo: Le Toan)

Ho Chi Minh City is currently far from a dream destination for many young couples as accommodation continues to increase in cost.

One such couple from the central province of Thanh Hoa, Mai Anh and Nguyen Manh, have had to ditch their plan to buy an apartment to resettle. Instead, they continue to lease a small flat in District 4 at a rental of VND5 million ($215) per month.

“We have saved around VND600 million ($26,000) after four years of living in Ho Chi Minh City and wanted to buy a small flat in the outskirts, which were selling at VND1.2 billion ($52,000),” Manh said. “However due to the shortage of supply, what we were looking for increased to more than VND1.6 billion ($70,000) and much over our budget. Thus we have to temporary halt our plans and save more.”

According to property consultants, the price of land in outskirt areas of Ho Chi Minh City has increased from 20 to 60 per cent compared to those even at the beginning of the year. The increasing prices are freezing the entire market, as real users cannot buy homes and sellers and speculators cannot seek out potential buyers.

In District 12, the price of land has increased to VND 30million ($1,300) from VND10 million ($435) per square metre over the last few years. And in Cu Chi, land price has moved up from VND15 million ($650) to VND50 million ($2,150) in the same timeframe.

Just like District 12, which inherited an improved transport system, District 9 has reported increases of both land and apartment units. Containing many high-rise apartments, a 70sq.m unit is now sold at VND2.5 billion ($108,750), around VND500 million ($21,700) higher than a year ago.

Supply shortage

According to the recent figures from the Ho Chi Minh City Real Estate Association (HoREA), the supply of houses and units in Ho Chi Minh City has seen a shortage because many projects have been suspended due to entering complex administrative procedures before developers can launch them for sale.

The most hunted units in the market now are Grade C, which more buyers can afford. However due to the suspended initiatives, even Grade C units have been falling in number. In 2016, Grade C units occupied 30 per cent of the total market, while last year it was just 17 per cent. Even more seriously, no new Grade C project has been launched in the first half of 2019.

According to Ho Chi Minh City Department of Construction, after reaching a five-year high of 83 projects in 2017, the number had dwindled to 59 last year. In the first nine months of 2019, only 12 housing projects across all grades received approval in Ho Chi Minh City, a 72 per cent on-year decline.

The declining supply has been partly due to conflicting provisions in the various laws regulating the sector. Such issues have hit construction firms and equipment suppliers hard, while construction workers are facing lack of work.

If the government does not make amendments to resolve conflicting provisions, the low supply could persist for years and banks would have trouble recovering loans to real estate businesses, the HoREA said. “Some real estate businesses are facing bankruptcy,” the association added.

Meanwhile Dang Hung Vo, former Deputy Minister of the Ministry of Natural Resources and Environment, said that supply of housing launched to the market from the second half of 2018 to September this year was almost zero, except for very few ventures which had completed necessary procedures previously.

“With increasing demand and limited supply, the price hike is understandable and this situation is not good for the market at all,” Vo warned.

Potential buyers go further

According to Lam Pham, CEO at DKRA Vietnam, Vietnam is in a “golden period” of population, with more than 96 million people, including 36 per cent of people at less than 35 years old.

“Through our figures we see that in the last 10 years, the proportion of young home-owners under 35 years old has been increasing and is currently at 23 per cent,” Lam said.

With an average income of $6,400 per year, a person living in Ho Chi Minh City would take 20 years to save enough to purchase a VND1.5 billion ($65,200) flat.

“House prices have been increasing faster than the average income, meaning the dream of owning a house in this city is becoming tougher. It is even hard for young people on a strong salary of tens of millions of VND per month to buy a small flat,” said Lam.

According to DKRA’s survey, in a diameter of 10km far from city centre, there are very few projects which are sold at less than VND1.8 billion ($78,200) per unit except from those which have poorer transport access. Average prices now range from VND2.6-3 billion ($113,000-$130,400) per unit while high-end units are sold at around VND5 billion ($217,000) per unit.

The Ho Chi Minh City population is increasing on average by one million every five years. However, in the last five years, housing prices have increased by up to 60 per cent.

To overcome the current freeze in the market, developers are actively collaborating with the Ministry of Construction to ensure guidelines on completing procedures and pushing projects forward.

Ho Chi Minh City has ordered a team to review all 130 suspended projects and accept some of those for continuation as soon as possible.

Ngo Quang Phuc, general director of Phu Dong Group, said that in order to break through the current situation, the government should map out special areas to develop affordable housing, especially for young people who are in high need of accommodation. “Limited supply while demand is very high causes many complicated issues which could impact the whole economy, not just the real estate market,” said Phuc.

Meanwhile Pham of DKRA said that in order to control price hikes, it is necessary to impose more tax on second homes, and tax unused land. (source: vir.com.vn)

November 13, 2019 / by / in
Read more 
Vietnam’s real estate still an attractive prospect

Vietnam’s real estate market continues to attract foreign investors because of its growth potential, especially investors from the Republic of Korea, according to real estate consulting companies.

In a survey by KB Securities, more than half of Korean-won billionaires had expressed a desire to invest in real estate in Vietnam, said Nguyen Hoai An, director of CBRE Vietnam, at a recent press conference releasing the quarterly report on Hanoi’s real estate market in the third quarter (Q3) of this year.

“We have seen a trend of Korean investors buying houses in Vietnam over the past 4-5 years. This trend has been continuing this year both in Hanoi and HCM City,” An said.

“They have been the most exciting foreign home-buyers in Vietnam for many years and the trend shows no sign of stopping.”

Customers of CBRE Vietnam said they were interested in Vietnam’s real estate market because the domestic economy was expected to see rapid growth in the coming years, An said.

Housing prices in Vietnam were attractive compared to their country, she said. For example, the average price of high-end housing was about 2,000 USD per sq.m in Vietnam while the price of a similar product in the RoK was about 15,000-20,000 USD per sq.m.

The attractiveness of Vietnam’s real estate market is explained by a number of factors, such as attractive selling prices, high profit potential and high quality products, according to Nguyen Khanh Duy, Director of HCM City Residential Sales, Savills Vietnam’s branch in HCM City.

Vietnam also amended legal regulations to create favourable conditions for foreigners buying property products in Vietnam, he said.

“Apartment prices in HCM City and Hanoi are generally lower than other cities such as Kuala Lumpur and Bangkok, despite much stronger growth,” Duy said. New home prices in the centre of Ho Chi Minh are now between 5,500 USD and 6,500 USD per sq.m.

Relatively low real estate tax in Vietnam also attracts buyers both at home and abroad, according to Duy.

Therefore, it is not surprising that the demand for real estate investment in Vietnam has increased significantly since 2015, when the amended housing law opened the local market to foreign investors.

Foreign investors expect those prices to increase in the coming years, according to An.

“Vietnam’s real estate market will continue developing. However, the prices will not be so high in the short term and Vietnam needs many years to have real estate prices approaching those in developed countries,” she said.

“Growth of real estate prices will depend on economic development and Vietnamese people’s ability to increase their incomes.”

“HCM City has been and will remain an attractive property market for foreign investors,” An said.

“In the first nine months, besides Korean investors, we saw investors from many other countries and territories pay more attention to the property market in Hanoi, including investors from Hong Kong, Taiwan and Singapore.”

In Hanoi, the western region had attracted foreign investors to buy and rent real estate products, especially from My Dinh to West Lake, she said.

There are many advantages in developing property for foreign investors when they like the domestic real estate market and consider it an attractive market, according to An.

However, to attract foreign investors, real estate companies must pay attention to many factors, especially foreign languages. This means ensuring staff can speak foreign languages and brochures are translated to introduce products easily to foreign customers.

“This is considered a challenge for domestic property companies because not all of them pay attention to this factor even though they know the importance of foreign languages.”

Other issues relate to property products, including the development of property meeting customers’ demands and the representatives of foreign owners managing and trading real estate when they are not in Vietnam.

“If property companies target foreign customers, they need to pay attention to these factors,” An said.

According to CBRE Vietnam’s quarterly report on the Hanoi property market in Q3 released on October 9, there were nearly 6,100 units launched from 18 projects in Hanoi, down by 33 percent quarter on quarter (q-o-q), leading to a total of 26,800 newly launched units during the first nine months of this year, up by 37 percent year on year (y-o-y).

Launched projects in this quarter were mostly located in the west of the city, accounting for 77 percent of total newly launched units.

Noticeably, Hanoi’s residential market showed a clear trend of decentralisation given increasing new projects launched in the farther districts such as Thanh Tri and Hoai Duc districts.

In terms of sales performance, more than 4,800 units were sold during Q3, down by 32 percent q-o-q. Although there was a decrease in the number of sold units in this quarter, the ratio of sold units to newly launched was on par with previous quarters showing stable market conditions.

In terms of pricing, the average primary pricing in Q3 was stable in comparison with the previous quarter, but recorded an increase of 3 percent y-o-y, averaging 1,337 USD per sq.m.

Together with the expansion of the residential market, the affordable segment is moving farther and farther away. For instance, the projects’ locations were typically more than 10km from Hanoi’s central business districts (CBD), according to CBRE Vietnam. In comparison, affordable products launched in 2019 are typically within a 10-13 km radius from Hanoi’s CBD with relatively stable pricing.

In the last quarter of 2019, 7,000 units are expected to be launched, bringing the total new launch in 2019 to around 33,000 units, up by 9 percent y-o-y. New supply will mostly come from township developments such as Vinhomes Ocean Park, Vinhomes Smart City or Park City.

Primary pricing is expected to experience an upwards trend reaching near 1,360 USD per sq.m on average at year end.

Providing active sales and marketing activities and improvements in product offerings, sales momentum is forecast to maintain a positive level achieving around 85-90 percent of total new launch during the year.

Source: VNA

October 23, 2019 / by / in
Read more 
Coworking spaces expand in downtown Saigon

Coworking spaces are expanding in Saigon’s central districts since the limited traditional office space there is unable to meet the growing demand.

In the third quarter a coworking space company rented two stories of a grade A office building on Le Duan Street, District 1, though construction was still going on, Savills Vietnam said in a recent report.

The 1,400-square meter area the company rented will be leased out starting in the first quarter next year.

Other coworking space companies have rented 2,000-5,000 square meters in some of the city’s newest office buildings.

By the end of September coworking companies had rented 52 percent of all office space in the central area, including in future projects.

While coworking offices are popular among small businesses and startups, large firms with hundreds of employees are also interested in them because of the flexibility they offer, Savills said.

The demand for coworking space keeps increasing since grade A office supply in the downtown area continues to be limited, and businesses struggle to find large space.

HCMC ranks 41st out of the 50 fastest growing coworking markets in the world this year listed by consultancy Co-working Resources.

A new coworking space opens every 47.5 days in the city, it added. (source: vnexpress)

October 23, 2019 / by / in
Read more 
Saigon apartment prices balloon in last 5 years

Apartment prices in HCMC have risen by more 50 percent across all segments since 2015, real estate firm DKRA said.

Aerial view of Ho Chi Minh City. Photo by Shutterstock/Tiep.Nguyen

In 2015 the average price of a high-end apartment was VND40 million ($1,720) per square meter. It had risen to VND61 million ($2,630) by August, and would continue to increase in the coming months, the firm said.

The average price of a mid-range apartment rose from VND21 million ($900) to VND32 million ($1,380) between 2015 and August 2019, a 52.4 percent increase. But the gain has been slow this year.

In the affordable segment, prices have increased from VND16 million ($690) to VND24 million ($1,030), a 50 percent rise. In the last 12 months they have risen by 9 percent.

Prices are expected to keep rising due to a short supply since projects are taking a lot of time to complete legal procedures even as demand remains strong given the high net migration to the city, DKRA said.

According to real estate firm Savills, total supply, which includes unsold units and newly built units in the city in the last quarter of 2018, fell 44 percent year-on-year.

This number fell by a further 34 percent in the first quarter of 2019 to just over 12,000 apartments, which represents a 57 percent drop compared to the first quarter of 2018. One of the problems the city market faces is the legal difficulty in selling apartments, Le Hoang Chau, chairman of HCMC Real Estate Association, said.

Many projects are stuck at various levels from applying for approval from local authorities and getting permission to begin construction to getting permission to begin selling.

According to the city Department of Statistics, Saigon’s base population at the end of 2018 was 8.85 million people.

(source: e.vnexpress)

September 16, 2019 / by / in
Read more 
Investors eye land plots in underdeveloped provinces

More investors are pouring money into underdeveloped provinces where land is cheaper than in HCM City and other big cities.

More investors are buying land in remote or underdeveloped regions due to cheaper prices and potential for growth in value.- VNA/VNS Photo Tran Xuan Tinh

Investor Pham Thi Trang of HCM City told Dau Tu(Investment) newspaper that she had bought 2,000sq.m of land in Long An Province’s Moc Hoa District for around VND1 million (US$43.2) per sq.m.

The cheap land is close to the provincial border and has unspoiled beauty, and because of its border location, it could double or triple in value in the future, Trang said.

Another investor, Le Thuan from Binh Duong Province, bought land for VND600,000 per sq.m last year in Ninh Thuan Province’s Thuan Nam District.

Though the land is located in a remote area, Thuan said the province would develop beach tourism and other profitable fields in the future.

Many real estate companies in HCM City are also buying land plots in regions such as Long An, Vinh Long, Binh Phuoc and Binh Dinh. These purchases have raised property values in those areas.

Le Tien Vu, deputy general director of Cat Tuong Duc Hoa Real Estate Investment JSC, said that real estate investors in southern Viet Nam were seeking land in rural and remote areas.

Land in cities have high liquidity and profits, but available land in cities such as HCM City is becoming rare and prices have peaked.

Vu said the land in underdeveloped areas was cheaper and could increase in value in the future. His company’s investment in 50 hectares of land in Binh Phuoc Province has been successful.

Nguyen Van Hau, general director of Asian Holding Real Estate JSC, said that legal procedures for land in such undeveloped areas were not as cumbersome and slow as those in city centres.

The land in these areas is also not affected by industrial air pollution, traffic congestion and noise pollution, and has high tourism potential if it is close to the ocean, forests or mountains, according to Hau.

In addition, expressway, airport and railway infrastructure development in recent years and in the next 10 years will make the land more profitable in the long run.

However, a representative from the Viet Nam Real Estate Association has warned investors that the growth of the value of land might drop unpredictably because that infrastructure development and big projects near these land plots might not occur as planned.

Investing in such regions, where returns on investments can take a long time, may also reduce investors’ capital that could be used for other opportunities.

Experts have told investors to carefully assess their capital and ability to withstand a lack of returns for a long period.

The HCM City Real Estate Association said in the first six months of this year, the amount of residential property up for sale was only 39.1 per cent of the figure in the same period last year.

Source: VNA

August 20, 2019 / by / in
Read more 
Real estate M&A attractive to investors

Investors are looking for industrial and logistics assets via forming joint-ventures with local industrial property developers or purchasing land and operating real estate, according to Jones LaSalle Vietnam Co. Ltd. 

The company further said mergers and acquisitions (M & A) in real estate is a bright spot in the market. The shortage of high-tech assets, modern warehouses and strong demand from businesses are promoting the potential of domestic industrial realty market.

It said asset quality, lease price growth, transaction size and remaining time of land use rights are key factors that investors consider.

Property experts said foreign investors continue showing interest in the Vietnamese real estate market, proving the strong growth of M & A market.

Though M & A activities could slow down in the two remaining quarters, the Government’s existing policies will improve the market’s transparency.

Additionally, the shift of manufacturing bases from China to Southeast Asian countries will continue bringing benefits to the region, including Vietnam.

Source: VNA

August 20, 2019 / by / in
Read more 
HCM City: office market continues stable growth

The office market in Ho Chi Minh City continued stable growth in the first half of this year, with some increases in rental prices and areas, according to major property consultant firms.  

The office market in Ho Chi Minh City

Co-working spaces became more popular, meeting the diverse demand of customers.

Duong Thuy Dung, Senior Director and head of the Professional Services of property consultancy CBRE Vietnam, said the vacancy rate of both Grade A and B was lower than 4 percent due to limited supply in the period.

As of the second quarter, the vacancy rate of Grade A stood at 2.6 percent, down 2 percentage points from the same period last year.

House owners of these segments upgraded material facilities to attract more buyers while adjusting rental prices, making them match the present market.

Troy Griffiths, Deputy General Director of Savills Vietnam, said the office market in the southern metropolis has grown stably over the past five years with increasing rental prices and areas, even when supply was expanding.

Of note, the rental price of Grade A offices continued to lead, up 2 percent in the first quarter and 13 percent from the beginning of 2018, he said.

By the end of June 2019, total rental area exceeded 1.22 sq.km of 15 Grade A buildings and 63 Grade B buildings.

Rental prices of the two grades rose due to the limited supply. The average price of Grade A in the second quarter was 46.7 USD/m2/month, up 0.9 percent against the previous quarter and 2.9 percent over the same period last year. Meanwhile, the monthly price of Grade B was 23.5 USD/m2, an increase of 0.3 percent compared with the previous quarter and 4.7 percent year-on-year.

Dung said the trade war between the US and China prompted foreign firms to move their offices from China to Vietnam, resulting in a 29 percent hike in demand for offices during the second quarter, up 21 percentage point year-on-year.

Nearly 40 percent of demand came from production and logistics firms and half of the companies have offices in China.

The flexible space market rose sharply in HCM City in the first six months of this year. Between April and June, the market had an additional 4,000 sq.m from Up Deutsches, The Hive-Huynh Khuong Ninh and Leo Palace in District 1, and Compass Office-Landmark 81 and Kafnu-Saigon Pearl in Binh Thanh district.

According to Savills Vietnam, over the past two years, the co-working space model has developed strongly in the city, with annual growth exceeding 90 percent. The space covers 37,000 sq.m, mainly in the centre of the city.

WeWork, Up, Dreamplex, Regus, Compass and Kloud have made their names in the market.

Property consultant firms said in the second half of 2019 until 2021, the office market will welcome an additional 14 offices covering more than 300,000 sq.m, with half of them Grade A.

The market is forecast to experience increasing vacancy rates in both Grade A and B during the next three years when a new wave of supplies comes. Rental prices in Grade A will increase slightly in 2019 and 2020 with growth rate reaching 3 percent and 0.6 percent, respectively.

Statistics show that more than 10,700 products were put up for sale, only 39.1 percent of the amount offered in the first half. Meanwhile, 8,560 units were transacted, or 46.8 percent of the same time last year.

The country’s largest property market also had a high absorption rate of 79.9 percent.

According to Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokerage Association, HCM City’s property market is set for a promising July-December as local policies are expected to boost both supply and transactions. Houses will sell well, however, at high prices.

Source: VNA

August 1, 2019 / by / in
Read more 
Vinhomes reports doubled Q2 profit

Real estate giant Vinhomes earned after-tax profit of VND8.46 trillion ($365 million) in the second quarter, up 102.9 percent year-on-year.

The corporation’s consolidated second quarter revenues also increased 309 percent to VND20.9 trillion ($902 million). Its consolidated Q2 2019 report said the surge in revenue and profit was largely due to Vinhomes delivering a number of subdivisions in its major projects.

In the first six months of the year, Vinhomes saw its consolidated revenue grow 70 percent year-on-year to VND26.8 trillion ($1.16 billion), and after-tax profits 37 percent to VND11.14 trillion ($481 million).

At its annual general meeting in May, Vinhomes announced plans to raise its overall after-tax profit by 40 percent in 2019 to VND20.6 trillion ($889 million).

Newly-appointed Vinhomes chairwoman Nguyen Dieu Linh said the corporation will look to expand to cities outside Hanoi and HCMC and begin leasing office space in its urban complexes.

Vinhomes operates 17 urban area projects in Hanoi, Ho Chi Minh City, Hai Phong City, northern Bac Ninh Province, and the two central provinces of Thanh Hoa and Ha Tinh.

It has the second largest market cap (VND294.09 trillion or $12.7 billion) on the Ho Chi Minh Stock Exchange, behind only Vingroup (VIC), its parent company which is Vietnam’s largest private conglomerate.

(source: vnexpress)

August 1, 2019 / by / in
Read more 
Ho Chi Minh City to auction 15 prime land plots in Thu Thiem area

     The planned Thu Thiem Urban Area in HCMC’s District 2 seen from above.

HCMC will auction 15 ‘golden’ land plots to attract large investors to develop the Thu Thiem New Urban Area and avoid state revenue losses.

Ho Chi Minh City Chairman Nguyen Thanh Phong Friday assigned the Management Board of Thu Thiem New Urban Area to map out 15 land plots located in Functional Areas No.3 and 4. These will serve as a basis to determine the starting price for auctioning.

The city authorities said they will also work with representatives of the Thu Thiem Church and the Thu Thiem Congregation of the Holy Cross in order to acquire land for the construction of a road along the Sai Gon River.

The authorities had earlier pledged to retain major parts of these two religious complexes that are over 100 years old, but said adjustments will be made to nearby areas to make them match with their zoning.

Thu Thiem New Urban Area is a 657 hectares (1,623 acres) megaproject to develop the city into an international financial hub, located on its namesake peninsula in the south-east of HCMC.

Function Area No.3, situated along the peninsula’s north bank, is planned to be a mixed residential and high-rise multi-functional commercial area, while Function Area No.4 is planned as a mixed area with residences, high-density multi-functional commercial complexes and local administration offices.

The latest decision on the auction was made after the Government Inspectorate in late June delivered its findings on a list of violations committed by city authorities on the allocation of state capital and the wrongful awarding of build-transfer (BT) contracts for the megaproject’s infrastructure projects.

It also suggested that the city auction off some land lots to prevent loss of state revenue and attract big investors for this megaproject.

The Thu Thiem New Urban Area, touted for the last two decades as the next central business district, was originally a densely populated but underdeveloped area in the last century.

Plans to develop the area were made in the 1990’s, and land acquisition began in 2002. An international design competition was held, and in 2003, a submission by U.S. design firm Sasaki Associates was selected.

Thu Thiem residents have filed complaints and lawsuits for years, citing violations of authorities, making the project mired in repeated delays.

(source: vnexpress)

July 29, 2019 / by / in
Read more 
Shared workspace business flourishes in downtown HCMC

HCMC welcomed over 4,000 square meters of co-working office space in the second quarter, concentrated in the central districts.

A co-working office in Ho Chi Minh City. Photo courtesy of Toong.

New co-working spaces were created mainly in five locations  – three clusters in District 1, the city’s business district, and two in Binh Thanh District, a short distance from District 1, according to real estate firm CBRE’s latest report.

Co-working space has been expanding at a rapid pace, and its occupancy rate averaged 80 percent in the second quarter, the CBRE report said.

By the end of June, there were 46,266 square meters of shared offices in HCMC, up 101 percent over the same period last year. This figure is projected to increase two-fold by the end of 2019.

Nguyen Hong Hai, CEO of office rental service Pax Sky, said co-working spaces are now popular because the supply of office space in HCMC’s central districts fails to meet demand of the rising number of entrepreneurs choosing to base themselves in the city.

According to the Global Research on Flexible Workspace report, the HCMC market is among the top five developing markets with a compound annual growth rate (CAGR) of over 80 percent per year.

A CBRE report last year showed that around 54 percent of co-working space users in Ho Chi Minh City were either founders or employees of start-ups, and approximately 14 percent were self-employed freelancers.

July 22, 2019 / by / in
Read more 
Search
CLOSE
Status:
Type:
Location:
SEARCH
Recent Properties