Condo market faces challenges in 2020: experts

Wednesday, Jan 29, 2020 10:00

A condo project in HCM City. Experts forecast that the market faces challenges in 2020. — VNS Photo

The condo market in HCM City is expected to face challenges this year, according to industry experts.

In the latest reports about market predictions, Le Hoang Chau, chairman of the HCM City Real Estate Association, said that the market would not face a bubble situation, but that it would encounter challenges in the first half of the year.

However, the market is expected to recover in the third quarter, thanks to the support of local authorities in solving difficulties facing real-estate developers, he said.

Chau also predicted that condos priced around VND2 billion each will continue to dominate the housing market in HCM City.

Having the same prediction, Duong Thuy Dung, senior director of CBRE Vietnam, said: “Licensing issues and credit tightening continue to be the main challenges for the condominium market in 2020. Buyers will face difficulty in buying a condo unit, not because they can't afford them, but rather because they can't find suitable options. On the other hand, developers are well-positioned to increase profits thanks to the shortage of existing condo projects in the primary market.”

In addition, the remaining issues, including flooding, air pollution and traffic congestion, have had a negative impact on living quality in big cities.

As a result, new township developments in fringe areas that offer full range of facilities and good connectivity will receive high interest from the market.

To meet this demand, developers have planned new township projects in suburban districts and neighbouring provinces. These projects offer fresh living environments for end-users as well as a good options for investors, especially in the context of limited supply in HCM City.

A CBRE report noted that in 2020 licensing issues would continue to pose a hurdle for the market, so about 30,000 units would be added to the market.

Some new projects in fringe districts which are expected to launch are Vinhomes Grand Park in District 9, AIO City in Binh Tan District, West Gate Park in Binh Chanh, PiCity in District 12; and the southern area with subsequent phases of Eco Green Saigon, Sunshine City Saigon and Sunshine Diamond River in District 7.

Primary prices will continue to increase due to a lack of supply. The luxury segment is expected to have a price increase of 10 per cent year-on-year.

Prices for high-end and mid-end segments will increase 5 per cent year-on-year, due to new supply and high price levels in 2019. The affordable segment will have a modest growth of 2 per cent year on year.

The secondary market will be more active due to a lack of supply in the primary market and new pricing levels across the market.

End-users may find limited options in the primary market and may turn to the secondary market which offers both completed projects and those with good construction progress, the company said.

JLL predicts that about 30,000-35,000 units are expected to launch officially in 2020, mainly from the Vinhomes Grand Park project.

“It should be noted that the number is subject to a great deal of uncertainty given the government’s tight control in granting land-use rights and construction licences. Strong demand is set to carry on and will boost the price further across all sectors.

"However, the demand in the 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,” the company said. — VNS

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