The condominium market in Ho Chi Minh City is likely to continue expanding in 2017, buoyed by sound macroeconomic factors including positive GDP
growth, a stable exchange rate and high inflow of FDI to Vietnam and especially to real estate from Korea, Japan and Singapore, according to CBRE
A total of 43,861 units are expected to be launched in 2017, of which the high-end segment will still account for a notable proportion of the market with over 13,000 new units, said Duong Thuy Dung, director of the CBRE Research and Consulting Department.
The market is expected to focus more on the mid-end and affordable segments this year, with nearly 40% of 2017 new launches being in the affordable segment.
Dung noted that an increasing interest rate, the announcement of Circular 36 (of the State Bank of Vietnam on tapering credit for real estate) and the end of the $1.4 billion house mortgage package will reduce demand and sales momentum in the middle segments.
The market is expected to maintain a high absorption rate in the 2017-2019 period. The absorption rate for the affordable segment, which has historically ranged from 40% to 45%, is expected to reach nearer to 60% in 2017.
As for the high-end segment, the high level of new launches and stricter legislation in funding may become impediments to sales momentum, she commented.
The luxury segment is forecast to maintain its current high absorption level at more than 50%. Limited land bank in the CBD (central business district) for residential projects is a key factor that enhances the appeal of luxury projects.
As prices of luxury projects in HCM City
are still low compared to other cities in Southeast Asia, this segment is still attractive to the local well-off as well as to foreigners, whose home ownership rights in Vietnam were considerably relaxed in 2015.
Reviewing 2016, CBRE said that total new launches in HCM City in 2016 reached 37,419 units, a decrease of 10% year-on-year. The market is adjusting itself to a more balanced position where it welcomed a bigger proportion of mid-end units and a smaller proportion of high-end units.
A total of 35,008 units were sold last year, representing a decrease of 4% year-on-year. The mid-end segment continued to perform well with more than 15,270 units sold, accounting for more than 40% of total transactions.