Slow growth in leasing products
According to Savills, supply of real estate the first 6 months has increased at a steady state. The total stock of office space is 1.580.000 m2 and is expected to see even more growth in this segment.
Proof of the potential for more office space growth is reflected in average occupancy, which has increased 1% quarter-on-quarter (QoQ) and 4% year-on-year (YoY). The total occupancy is now 97%, and rent has increased slightly 1% QoQ and 5% YoY.
Grade A and B projects in District 1 contributed to most of the new take-up this quarter, accounting for 56% of all new leased office space.
Serviced apartment and hotel stock also increased slightly in the first six months. For serviced apartment, stock has increased to 4.530 units from 82 projects, reflecting a 4% increase QoQ and 6% YoY. However, the average occupancy decreased to 81% due to additional stock, which is the lowest point since Q1/2013.
Hotel rooms have increased to 15.400, up 12% from last year. However, average occupancy is 64%, a 1% decrease from last year. However, rents of serviced apartment and hotels have increase 3% to 7% YoY. The reason for this being more serviced apartment have entered the market and more 5-star hotels are built.
Private properties see most robust growth
Apartments have the strongest stock levels in Ho Chi Minh City. According to Savills, in Q2/2016, about 8.700 units are up for sale, a 15% increase QoQ. The are more than 40.100 primary units across all segments.
Absorption rate has increased with 6.900 transactions, up 10% QoQ and 34% YoY. Grade B apartments take the lead with 49% of all sales, while Grade A dipped 5% due to additional supply.
The most astonishing observations is the robust absorption of villas and townhouses. There are approximately 1.600 new units, pushing primary stock to about 3.200 units, up 55% QoQ and 180% YoY. Sales also increased significantly, up 78% QoQ and 106% YoY.
Medium to large sized townhouses of 90 to 120 m2 were absorbed well in the midst of strong developer rollout of smaller villa and townhouse products.