Which apartment segment will increase in price by 6% in 2018?
Apartment supply will grow strongly in the mid-range segment and prices in the primary market are expected to continue to increase, the luxury segment may increase by 6% compared to 2017.
A report on the 2018 Vietnam real estate market outlook by CBRE Vietnam recently released said that the whole country currently has a huge demand for housing, especially in large urban areas such as Hanoi and Ho Chi Minh City.
According to CBRE Vietnam, with a young and dynamic population (70% of the population aged 15-64) and an urbanization rate of about 3% per year, the Vietnamese housing market is in a period of strong transformation.
In 2017, the housing market in Ho Chi Minh City and Hanoi continued the growth momentum of 2016. In both cities, a total of 66,000 apartments were offered for sale and 59,000 apartments were absorbed.
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| Apartments are still the consumption target of buyers. Photo:Tien Tuan |
The apartment model is becoming more and more popular with Vietnamese people and in recent years has been considered the "center" attracting most of the consumer demand. CBRE explains that due to the lack of public housing projects, the apartment market is being led by private investors.
High-rise urban areas are increasingly attracting more people with many bustling commercial activities. Vertical urban development will take place more rapidly in the coming years, especially when many projects will complete construction and hand over apartments in 2018 and 2019.
According to CBRE, apartment projects are the golden goose for investors, thanks to high demand for housing as well as the ability to recover capital quickly. However, the boom of projects as well as the large number of apartments about to be handed over also comes with concerns about pressure on the secondary market as well as the rental market.
It is worth noting that the apartment market is becoming more balanced, focusing on the mid-range and affordable segments. The market share of foreign investors in new supply has shown an increasing trend in recent years, reaching 15% of the total cumulative supply in Ho Chi Minh City.
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| Mid-range apartments will lead the market in 2018. Photo:Le Quan |
Domestic developers are making big plans to expand their market share, even entering segments that are not their current strengths. The market is expected to continue to be busy this year with new launches, possibly with more than 37,000 units. A series of projects to be handed over in the near future are said to put pressure on the secondary market, as well as the rental market.
The market is forecast to continue its growth momentum with more supply targeting the mid-range segment, the number of apartments sold this year will increase by 20% compared to 2017, reaching about 40,000 units.
Apartment prices in the primary market are expected to continue to increase, especially the luxury segment which could increase by 6% compared to 2017.
Emerging areas in District 2 (Thu Thiem, An Phu, Thanh My Loi) will be home to many prominent projects. District 9, Nha Be District, Binh Chanh District and Can Gio District will also be areas that receive much attention.
In 2017, the Ho Chi Minh City market had 31,000 apartments for sale, down 19% compared to 2016. However, this is the first time in the past 5 years that the number of apartments sold in Ho Chi Minh City is higher than the number of new offerings. There were 20,200 successful apartments sold in the mid-range segment, accounting for 64% of the supply, followed by the high-end segment, with 21%. Last year, only one project in the luxury segment was offered for sale.
