In the third quarter of 2023, the real estate market in Ho Chi Minh City witnessed a positive change in the type of apartment thanks to new supply from the city. Thu Duc. On the contrary, two types of serviced apartments and villas/townhouses continue to face difficulties because transaction volume is still low.
New supply boosts the transaction volume of this type of apartment
According to Savills Vietnam quarter 3/2023 Ho Chi Minh City real estate market report, the number of new apartments increased by 572% compared to the previous quarter and increased by 11% over the same period, to 2,528 units, from two new projects and 6 phases. next. Among them, is the City. Thu Duc accounts for 74% of new supply; Vinhomes Grand Park – The Glory Heights (Grade B) alone accounts for 59%. The remaining new supplies mainly come from Grade B and C projects in Binh Tan and Binh Chanh.
On the other hand, primary supply increased by 32% over the previous quarter and 12% over the same period, to 7,722 units, partly relieving the pressure of lack of supply. Grade B has the largest supply with a 49% market share, followed by Grade C with a 34% market share and finally Grade A with 17%.
Thanks to increased supply, the number of transactions in the third quarter of 2023 in Ho Chi Minh City reached 2,003 units, an increase of 561% compared to the previous quarter and 102% over the same period. The absorption rate improved by 21 percentage points compared to the second quarter and 12 percentage points over the same period, to 26%. Vinhomes Grand Park – The Glory Heights accounted for 55% of sales in the quarter. If this project is excluded, the market's performance is still struggling with 903 transactions, equivalent to an absorption rate of 15%.
If excluding 1,100 transactions at the Grade B project, Vinhomes Grand Park - The Glory Heights, Grade C projects have 651 transactions, showing that the demand for affordable housing is still high. Grade B projects have 210 transactions, while Grade A only has 42 transactions.
Investors have applied many sales policies, including support for early interest and principal payments, extended payment schedules, and rental commitment programs.
Since the beginning of 2023, the Government has made many moves to support the real estate market. To remove legal problems, the Ho Chi Minh City People's Committee has focused on resolving 148 projects; 39 projects have had results. The State Bank of Vietnam (SBV) continuously lowers interest rates, and Circular 10 will bring better access to capital for ongoing projects. These mechanisms are expected to help increase supply and promote market development.
Looking ahead, Savills believes that by the end of 2023, there will be more than 1,900 new units expected to be offered for sale. Grade C will be the key product with a 69% market share, grade B will have a 26% market share, and grade A will have 5%. The Privia (new project) and the next phases at La Partenza and West Gate are expected to launch in October 2023 with sales or construction permits. Some currently paused projects will also be restarted in the fourth quarter of 2023, including Salto Residence and Fiato Premier.
Serviced apartment supply increased but rental capacity decreased
Coming to the serviced apartment type, in the third quarter of 2023, the supply was at 7,463 units, an increase of 6% over the previous quarter and 23% over the same period. Five projects reopened after renovation providing 233 units and an additional 12 existing projects.
Supply continues to move outside the center; Supply in non-CBD areas increased by 10% over the previous quarter and 34% over the same period; Meanwhile, supply in the central area only increased by 3% and 14%.
In contrast to the increased supply, rental capacity only reached 81%, down 2 percentage points compared to the previous quarter because tenants stopped renewing contracts and demand for short-term stays decreased during the low season. However, rental capacity increased by 3 percentage points over the same period thanks to long-term rental demand recovering from the return of foreign experts and domestic short-term business visitors.
On the other hand, rent increased by 1% compared to the previous quarter and over the same period, to 518,000 VND/m2/month. Rents in the central area increased by 2% compared to the second quarter, after the landlord stopped rent incentives; However, it is still 7% lower than the third quarter of 2019. Rents in non-CBD areas remain unchanged quarterly.
The supply of villas/townhouses hit the lowest level in the past 10 years
Finally, there is the villa/townhouse type, this type had no new supply in the third quarter of 2023, primary supply reached the lowest level in the past 10 years with 766 units, down 24% compared to the previous quarter and 5% over the same period. City. Thu Duc accounts for 88% of the total primary supply. Products over VND 30 billion/unit account for 86% of supply.
Along with the scarcity of supply, the number of transactions in the third quarter only reached 64 units, the lowest since 2018, down 43% and 82%, due to declining demand, no new supply, and expensive inventory. red. The absorption rate only reached 8%, down 3 percentage points compared to the previous quarter and 36 percentage points over the same period. Commercial townhouses accounted for 64% of transactions in the quarter, mainly from The Global City.
Faced with the above situation, investors continue to be cautious and even suspend sales, limit marketing, and delay the launch of new projects until next year. Four projects that were open for sale last quarter have temporarily stopped selling this quarter to complete legal procedures, wait for the market recovery, and wait for the completion of surrounding infrastructure projects.
Meanwhile, in existing projects, some investors continue applying diverse sales, and loan and rental commitment policies to attract buyers.
According to Savills, in the fourth quarter of 2023, it is expected that about 200 new apartments will be offered for sale to the market. By 2026, the market is expected to welcome an additional 4,600 units for sale and many key infrastructure projects being completed.
With the push of new decrees from the Government, policies to reduce interest rates, and increase public investment, the market is expected to soon improve liquidity. By 2026, the completion of Long Thanh Airport and Ring Road 3 is expected to boost housing demand in Ho Chi Minh City and neighboring provinces such as Binh Duong, Dong Nai, and Long An.