CBRE Positive about the Prospect of Vietnam Economy and Condominium Market

Diep Nguyen

14:27 05/07/2018


The latest released report, CBRE gave positive assessment on Vietnam economy’s prospect and the Vietnam condominium market in the coming time, especially in high-end segment.

CBRE Positive about the Prospect of Vietnam Economy and Condominium Market
Continuing impressive trend of the first quarter of 2018, Vietnam’s second quarter GDP growth was recorded at 6.79% year-on-year, which adds to the first half growth of 7.08%, the highest growth rate in 8 years. CPI in May and June were also at the highest levels since 2011, which raised average first 6 months’ CPI of 2018 to 3.29% from a year earlier. The current level has approached the targeted CPI of 4% for the entire year set by the National Assembly.
By the end of the second quarter of 2018, export value reached USD 113.93 billion, an increase of 16% compared to previous year while import valued at 111.22 billion, up by 10% year-on-year. As a result, Vietnam recorded a trade surplus of USD 2.71 billion. 
The key drivers behind export growth were mobile phones, computers, electronic equipment, which accounted for 38.4% of total export value, rose by 18% year-on-year. Meanwhile, import growth was driven by 38.8% increase in gasoline, 17.1% increase in textile.
Total value of foreign direct investment in Vietnam, including newly registered capital, increased capital, and capital contribution & share purchase reached USD 20.33 billion, an increase of 5.7% year-on-year. Real estate sector attracts the second most FDI injection with USD 5.54 billion, accounting for 27.3% of the total, in the period. This figure is noteworthy as real estate typically only accounts for 6-9% of total FDI.  
Hanoi to be the country leader in FDI approvals in the first half of 2018, with USD 5.87 billion. The highlight of this quarter is Japan-based Sumitomo Corp, along with other local partners such as BRG, were approved by Hanoi Municipal People's Committee for a smart city project at Dong Anh District worth USD 4.13 billion. Lotte also pledged to invest USD 600 million in a high-end international standard complex, including shopping centers, office and hotels in Hanoi. 
The condominium market is to get positive signal 
In the second quarter of 2018, there were 6,534 units launched from 19 projects in Hanoi, down by 20% year-on-year. Launched projects in this quarter are mostly located in the West and North of the city accounting for 53% and 25% of total new launched units. 
It is noticeable that there were three new projects in high-end segment including D’Eldorado 2, Starlake and Vinhomes West Point, all located in prime position, which drew positive market attention. The share of high-end segment in this quarter has increased from 15% in the first quarter of 2018 to 37% in this quarter.
In terms of sales performance, 5,900 units were sold during the second quarter of 2018, down by 22% year-on-year. This time of the year is when developer typically review current products and prepare for new products launched at the end of the year.  The slower launching speed also allows market to absorb unsold units. 
In terms of pricing, the average selling price from developers in the second quarter of 2018 was recorded at US$1,332 psm, down by 0.4% quarter-on-quarter but up by 0.4% year-on-year. There were slight adjustments up and down from 0.3% - 1.5% across different market segments during this quarter. The three abovementioned projects have increased the average primary price of high-end segment by 1.5% year-on-year.
In 2018, CBRE forecasts there will be 32,000 units launched in Hanoi – a decrease of 10% year-on-year. The decrease in launched supply allows inventories to absorb, which is a positive signal for the market. This shows that developers are more experienced in developing residential projects and analysing market conditions.