Apartment demand remains high despite low supply
05/08/2019 16:18 | Source: The Leader
Apartment demand in the Vietnam’s two major cities rather healthy in the context of limited new projects. While prices stay flat in Hanoi, they soar to a record high in Ho Chi Minh City (HCMC).

Amid the supply slowdown in Ho Chi Minh City, over 4,300 apartments were sold within the second quarter of 2019, on par with the level recorded in the prior quarter, JLL noted in its latest report.

Accordingly, good sales rates have been seen across all segments, with mid-end projects in a price range of $1,200-2,000 per square metre being on top demand.

In HCMC, official launches hit over 4,100 units, the lowest level since the market bound back in 2014. This is said to be the result of the continued prolonged construction approval process.

Apartment market

The tightened control of new developments has forced the supply trend towards a more sustainable mode. Accordingly, only projects having approval regarding land use rights and construction permits are able to be sold off-plan.

Over 4,660 units were sold in the second quarter, notably lower by 65.3 per cent quarter-on-quarter, in tandem with supply decline.

Slower investor demand became more evident after a period of strong growth, according to JLL. Only 5,900 units newly were added to the market in the second quarter, nearly half the first quarter’s figure. Most of them came from the subsequent phases of existing projects. This was also the lowest level of new launches since the market rebounded in 2014. Most new launches projects are small scale with less than 500 units per project.

Demand from owner-occupiers have remained rather healthy, while the widespread trend of increasing interest rate and stricter loan assessment process amongst commercial banks have prevented buyers in accessing the mortgage.

Meanwhile, smart home concept has been appreciated on the market recently. The sale rate of units with smart function has been typically higher than that of traditional unit type on the same project.

As a result, investors have started to shift their investment from high-end apartments to villas/townhouses to enjoy a better capital gain, given the same investment amount. Due to limited new supply on primary market, owner-occupiers tend to look for high-quality supply on secondary market.