Vietnam apartment market improves, triggers hope for 2014

TN News

Email Print

   Photo by VnExpress

With the residential market being buoyant towards the end of 2013 amid an upsurge in sales and a number of new launches, property services firm CBRE Vietnam expects a further consolidation this year.

In Ho Chi Minh City the fourth quarter saw 2,702 units launched, taking the total number for the year to 6,114, a 84 percent year-on-year rise, the company said in its quarterly report.

Affordable units made up 57 percent of the new launches in the fourth quarter.

The increase in new launches showed developers' confidence in the recovery of the market. On the other hand, it will contribute to increasing unsold stock in the market since absorption continues to be lower than new supply. The outstanding inventory reached 17,214 units.

As for prices, the affordable apartments segment was notable in seeing primary prices reduce to US$630 per square meter, down by 1.4 percent quarter-on-quarter and 6 percent year-on-year.

Duong Thuy Dung, associate director of CBRE, said: "This was the first time prices in this segment saw a noticeable reduction as some projects were supported by the credit package.

"In addition, some developers were happy to reduce prices to achieve a good sales rate rather than keep high prices and accept low sales volume."

Sales on the primary market again showed improvement in the quarter, with the number of units sold rising by 40 percent quarter-on-quarter and 54 percent year-on-year to more than 2,000 units.

Half of the successful transactions involved affordable units.

The improving economy, attractive sales programs, and more affordable prices were key reasons for this steep growth rate.

This year is expected to see further improvement in terms of sales volumes if prices are reasonable, products meet the demands of the market, and construction shows good progress, CBRE said.

In Hanoi, the housing demand at the end of the year generally increased, with the total number of units sold in the fourth quarter being 46 percent higher than in the previous quarter, real estate firm Savills said in its quarterly report.

 

Savills also noted that there were decreases in prices in all grades in the final quarter -- grade C apartments witnessed a sharp reduction of 7 percent, while it was 6 percent and 4 percent for grades B and A.

The absorption rate was 11 percent, up 2 percentage points quarter-on-quarter, thanks to lower prices, rapid construction progress, offers of shell packages and a wide range of promotions.

In its forecast for 2014 CBRE said both the HCMC and Hanoi residential markets would see a rise of the middle class.

By the end of 2014 the volume of sales in the mid-end sector would be equal if not greater than those in the affordable sector, it forecast.

Office sector

In HCMC, the new net absorption reached 91,992 square meters in 2013, or 7.6 percent of the total supply in grades A and B, CBRE said.

Thanks to reduced vacancy levels across the market, grade A and B rentals went up by 3 percent and 1.7 percent from the previous quarter.

CBRE said landlords would take advantage of renewal positions to push rentals this year given limited availability at premium grade A properties in District 1, HCMC, and no identifiable supply on the horizon.

This is in contrast to Hanoi where great pressure persists in the office market as supply of both grades A and B is still on the rise.

The HCMC grade B office market is expected to remain flat amid a steady flow of new supply.

Retail sector

The market had a busy time at year end with new supplies and entries of foreign F&B retailers. Aeon Mall, McDonald's, Dunkin' Donuts, Super Sport, and Dairy Queen are either just open in Ho Chi Minh City or looking for a place to open.

Average vacancy rates for purpose-built retail space stayed at approximately 12 percent in 2013, resulting in the lowest net absorption in seven years.

CBRE monitoring of leasing deals noted more transactions in high street locations as retailers are moving out of shopping centers to look for cheaper alternatives.

CBRE said about the market outlook that the entrance of Starbucks and McDonald's and Vietnam's obligations under WTO to permit 100 percent foreign ownership in the restaurant sector in 2015 would see the widest variety of retailers come to Vietnam this year to at least research the market.

Like us on Facebook and scroll down to share your comment

More Business News