Home sales in Vietnam’s major cities fell by between 40 per cent and 60 per cent in the first half of this year, while rents retreated by 40 per cent, according to Cushman & Wakefield Vietnam.
“Launches of new projects were naturally lower than at the same point last year, down 30 per cent and 60 per cent in Hanoi and Ho Chi Minh City, respectively … as buyers became more cautious,” Alex Crane, Cushman & Wakefield Vietnam’s managing director, said. “This is despite developers offering attractive financial incentives, such as interest-free loans from banking partners and longer payment schedules,” he said, adding that home prices were likely to plateau in the short term.
The supply of new homes dropped by 52 per cent in the first half, while sales were down by 55 per cent, the lowest in five years, according to luxury property developer SonKim Land, which sells Vietnam property to Hongkongers. The company has five residential projects in Ho Chi Minh City.
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Property investment has also slumped, declining to US$183 million so far this year, just more than a fourth of the US$655 million in investments for the whole of 2019, according to data from Real Capital Analytics, which tracks deals worth at least US$10 million.
The outlook for Vietnam’s property market, however, remains positive despite the drops in home sales, rents and the supply of new homes, because of its success in controlling the spread of the coronavirus pandemic.
“With effective containment of the pandemic, arguably the best in Southeast Asia, Vietnam has gained even more attention among international investors,” Cushman’s Crane said. “Many investors were attracted before the pandemic, and we expect even more new entrants in 2021.”
For instance, a 969,000 sq ft luxury residential development in Ho Chi Minh City being developed by Hong Kong developer Swire Properties and local firm City Garden JSC, has already received interest from expats in Vietnam, foreign and domestic investors, as well as end users, according to City Garden.
The River Thu Thiem Project will consist of three residential towers offering 525 luxury flats. Prices at the project will range from US$400,000 for a one-bedroom unit to US$4 million for a penthouse. The units are expected to be turned over in 2022.
“Vietnam already attracts many foreign investors, as the average house prices are significantly lower compared to Hong Kong, Korea, Japan, Singapore and major cities in mainland China,” City Garden said. “For example, a luxury flat in a prime location in Ho Chi Minh City costs [about] US$10,000 per square metre. The same flat can cost four times more in Singapore and Hong Kong.”
Swire said it saw great potential in Vietnam, whose development story was very similar to mainland China’s. The country is its third location in the Southeast Asia region along with Singapore and Indonesia. “The project targets both local and international markets,” it added.
Hongkong Land launched The Marq with An Khang in Ho Chi Minh City last year. Sales of the development, which consists of 515 one to four-bedroom flats, have been hit by the pandemic, Asia Bankers Club, which promotes The Marq in Hong Kong, said. Physically signing sales and purchase agreements was a requirement for buying property, the agency said.
Project launches have also been delayed because of social distancing measures. “Our very first sales event of the year was supposed to take place in early August, but due to Covid-19, we had to delay it as the government banned public gatherings of more than 30 people,” said Andy Han, SonKim’s chief executive. “We are now trying to organise a new event in October.”
This article Vietnam homes sales, rents and supply all fell in first half, but its property sector remains attractive thanks to successful coronavirus response first appeared on South China Morning Post