Experts assess HCM City property market

Friday, Jun 02, 2017 09:00

Being the economic hub of the country, HCM City has kept developing and attracting people from other regions as well as countries. This migration is one of the factors that keep its real estate market buzzing. Viet Nam News reporter Thu Ngan speaks with expatriates and real estate executives to find out how they see the market now.

Michael Dang

Michael Dang - President of Anpha Holdings

The real estate market in HCM City is clearly divided into three satellite areas, all connected to the central region. The three are its east, south and west.

The east comprises District 2, District 9 and a part of Binh Thanh District. In this area, the main supply is mostly on Nguyen Huu Canh and Dien Bien Phu streets and Ha Noi Highway, which is near the first metro line. This area has many advantages thanks to plentiful land, growing infrastructure, proximity to Districts 1 and 3, and a status as the gateway to the southeastern economic region. It is also a place inhabited by foreign businessmen who work in Binh Duong Province. Because of these reasons, both supply and demand in this area are always huge.

Since the beginning of this year condo transactions in this area has been slower as supply has decreased. However, it remains an attractive area.

Land prices in District 2 are stagnant at this moment. In District 9, however, there has been a strong surge.

Investing in land in District 9 at a price of VND25 million per sq.m is still a good choice. Smart investors often buy lands and houses in projects which are clearly planned.

The southern region includes District 7, Phuoc Kien Commune of Nha Be Rural District and a part of Binh Chanh District.

The region has been developing for more than 20 years around the core of Phu My Hung City Centre. The region has social and transport infrastructure that others cannot in the next five to 10 years. With a network of international schools and universities, healthcare centres and malls, it is a place where the intelligentsia and foreigners live.

The south is also home to the Hiep Phuoc and Long Hau industrial parks and Hiep Phuoc Port, which helps connect with the southwestern economic region.

The real estate market in the south is hot thanks to lots of proposed infrastructure works.

Since it has been developing for a long time, the southern region will not see a sudden hot streak like in other places, especially since urban planning here is professional.

The western region comprises Tan Phu, Go Vap and the rural Hoc Mon and Cu Chi districts. The place used to see land ‘fever’ due to hazy information on planning. This is a place where many people live. It has not developed or had professional planning for a long time. It is easy to understand why the land ‘fever’ occurred when some planning information came into the market.

To develop like other regions, the west needs a long time as well as a push in the form of industrial zones, logistics centres and office buildings, which will help attract high-income workers.

The real estate market across the city is determined by the macro economy and global political situation.

Viet Nam is attracting a lot of investment from other countries and territories. The number of foreigners coming to Viet Nam has kept increasing, helping prop up the house leasing market, especially in the east and south. Demand in the office segment will also surge.

I do hope that the city will focus on policies to develop social housing as well as the housing segment for low-income people. With that, I believe, the market will be stable.

Le Ba Chi Nhan

Le Ba Chi Nhan - Senior Economist

The HCM City real estate market is since the beginning of this year facing a surplus in the condominium segment. While demand is low, there has been excessive supply.

The first reason for this is the inventory left from 2016. While this has not been consumed, there is new supply coming in from projects finished this year.

Furthermore, the supply this year can only meet a small part of the demand because, while both are massive, they are in completely different segments: While there is plentiful supply in the high-end segment, the demand is in the low end.

In terms of land, as we see, there has been a “fever” in districts 2 and 9 as well as the rural Nha Be District. This is caused by the lack of knowledge of urban planning among the public. Due to that, many thought the rural district will become an urban district – "quan" as opposed to "huyen", which Nha Be now is -- after land brokers said so.

To avoid such a situation again, authorities ought to publicise all information about plans and clearly show which rural districts will become urban districts so that people can know and not fall into the trap set by land brokers.

Nguyen Vinh Tran

Nguyen Vinh Tran - General Director of Kien A Group

Since the HCM City real estate market recovered, this is the most hectic time. This buzz is in all segments and regions.

The number of houses and condos put up for sale has increased tremendously and buying is high.

Buyers and developers are keen because there is a myriad of works underway or planned to upgrade transport infrastructure in the south and east.

This is a golden opportunity for real estate developers around the country to launch new products. However, their success depends on their intelligence and ability to capitalise on the opportunities in the market.

Currently, the market segments are not based on the price of a square metre of land; it is based on the price of a house. Buyers now focus on how much they have to pay for a house and not how much it costs per square metre.

The hottest segment in the market now comprises houses priced at VND4-6 billion. The high demand in this segment is attributed to the traditional Vietnamese love for houses. Furthermore, the land available in this segment is now reduced in the central areas and so more and more people want to buy it at the moment. This segment, I think, will continue to be hot in the coming time since the prices will keep climbing.

In the next six months supply will continue to increase with many new projects. This will surely affect the selling plans of developers. However, if developers build projects that meet the actual demand among customers, they will continue to flourish.

Duong Thuy Dung

Duong Thuy Dung - Director of Research and Consulting, CBRE Vietnam

In recent years the HCM City residential market has recovered significantly thanks to the improvement in the nation’s economy and the city’s infrastructure. Recent infrastructure developments are beginning to be carried out, enhancing connectivity, which is a pre-requisite for accelerating residential development.

In HCM City, the East is benefiting from the construction of more bridges and roads while the metro route No 1 is expected to be ready in 2020. There is huge development potential for areas along the metro line and the city’s eastern part. The West achieved a growth rate of 5-6 per cent, which is by 1-2 percentage points lower than the East’s. In 2017 the West has become more attractive thanks to the completion of public facilities like the Paediatric 3 Hospital in Binh Chanh District and Aeon Mall in Binh Tan District. It can be observed that developers are closely following these developments to plan their next moves.

Looking forward after a quiet first quarter in 2017, the market is adjusting itself to become more balanced, welcoming a bigger proportion of mid-priced housing in new launches. Most of the mid-range projects are located in outlying districts with good facilities and superb connectivity with the central business district. There is strong demand for both owning and renting in the mid-range segment thanks to the rising middle class.

Buyers are becoming more discerning and on-time delivery is now expected as a matter of routine. Projects that want to sell well must also have a good range of facilities and be able to create a harmonious living environment as well as a sense of community among its residents. More projects are expected to be launched by foreign developers this year, both by existing players and newcomers. This helps raise competitiveness, strengthens their local counterparts, and thus increases quality standards of housing projects in Viet Nam.

End-users and investors are advised not to blindly invest in property without doing proper research in advance. Buyers should pay attention to a project’s legal status and the developer’s reputation, and especially, fully understand the contract terms and conditions. With Government intervention and regulations, the market is expected to become more transparent. However, this might not happen in the short term.

Ngo Dinh Han

Ngo Dinh Han – Marketing Director of Nam Long Group

Since the beginning of this year the HCM City real estate market has seen positive signs with good growth and transactions, especially in the mid-priced segment in good locations and with good infrastructure.

Unlike in 2016, when there was huge supply in the high-end segment, in 2017, since the beginning of the year, there has been massive supply in the mid- and low-priced segments at prices of VNĐ1.2-1.7 billion (US$52,600-74,500).

This is an affordable price for customers and demand for owning a condo in the city has kept increasing.

However, projects have only been successful if they have good design, amenities, living environment, location and payment plans.

In the second half of this year demand for projects priced under VNĐ1 billion ($40,000) per one condo will continue to surge.

Projects with units costing VNĐ1-2 billion will also in high demand. To sell their projects, developers should focus on good location, amenities and payment plans.

The high-end segment will face more challenges in the second half due to high supply. In 2014-16 a large number of units were bought in this segment for investment purposes.

In my opinion, there will be surge in house and villa because of low supply. — VNS

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