The purchasing power of apartments in Ho Chi Minh City has decreased significantly and yet, the demand for land for residential purposes is still recording positive signals.
Since April 2018, the city’s apartment market has recorded few new projects for sale. The situation is attributed to the tightening of loan credit by banks for the real estate sector.
Another cause is that municipal authorities are preparing to issue a housing development plan up to 2020, with some adjustments – a factor which will affect the apartment development strategies for many enterprises.
According to Duong Thuy Dung, Senior Director and head of Research and Consulting at CBRE Vietnam, the number of new apartments offered in HCM City in the third quarter reached 6,700 units, down 14 percent over the same period in 2017.
In the first nine months of this year, more than 22,000 apartments were offered for sale, down 1 percent year-on-year.
Le Hoang Chau, President of the HCM City Real Estate Association (HoREA), stated that in the first two quarters of 2018, the national real estate market showed signs of decline, both in supply and in the total number of transactions.
Particularly, in HCM City, the overall supply of housing projects fell by 44.5 percent, of which the high-end, middle-range, and popular segments reported respective decreases of 25.9 percent, 32.6 percent, and 69.7 percent. The number of mergers and acquisitions (M&A) deals also declined, with only 6 out of 15 projects eligible for approval.
HoREA predicts that the middle-range segment is likely to grow strongly, holding a key role in the city’s real estate market for the remaining months of the year.
Su Ngoc Khuong, Investment Director of Savills Vietnam, said the scale of the apartment market in HCM City is still quite stable and will continue to grow in the time to come.
It is forecast that in the next three years, the segment of grade-C apartments will occupy 60 percent of the future supply.