Ho Chi Minh City's property market has bright prospects ahead as demand for apartments and business space will grow alongside the economy, UK-based real estate service provider Savills said on Thursday.
The company both evaluates and trades in the market.
A positive demand trend remains in the city's apartment segment, "fueled by increasing disposable income and growing migration," Savills found in its quarterly report. During the 2004 to 2009 period, approximately one million people moved to HCMC.
The company forecast that apartment demand will be strong in the smaller-sized and reasonably priced (US$42,000- 79,000) apartment segment.
Savills said the third quarter witnessed the highest number of apartments absorbed into the primary market, at approximately 4,400 units, equal to total absorption over the first six months of the year. Supply also surged, reaching a record of approximately 16,600 units nearly triple last year's figure.
HCMC will see the construction of 10,000 new units in the next two quarters, the company said.
The city's economy expanded by 11.2 percent in the first nine months with a gross domestic product of around $16 billion, official statistics showed.
Savills said in the mid and long-term, the economy is expected to continue growing rapidly. For this reason, demand for office space will also rise.
"Grade A office buildings are waiting for a new wave of foreign direct investment inflow; while Grade B and Grade C buildings depend much on the health of domestic investment," according to the report.
By the end of 2010, 14 new office buildings will be completed and will add approximately 100,000 square meters net area to the market.
As for the retail segment, Savills observed that both occupancy and rental rates tended to decrease during the third quarter. Average occupancy fell around 2 percent compared to the previous quarter, to 94 percent. The average rent was $75.2 per square meter per month.
"Along with the rapidly growing economy of HCMC, the demand for daily products has been growing substantially as well as diversifying," the report said. "This leads to a high demand for retail centres of a big population in HCMC."
Savills said the retail market has strong potential in the mid-term as Vietnamese consumers are beginning to gravitate towards luxury brands, international franchises and domestic goods of high quality.