The Ho Chi Minh City housing market looked up in the third quarter after a long period of negativity, with a sharp rise in the number of new launches, property services firm CBRE Vietnam said.
Around 1,700 units were launched, an increase of 46 percent from the previous quarter and 12 percent from a year earlier, the firm said in a quarterly report released October 3.
The affordable segment accounted for nearly 73 percent of the units.
The positive signals in the housing market were backed by continued review and evolution of legislation as well as further development of infrastructure in Ho Chi Minh City.
In August the government vocally supported a proposal by the Ministry of Finance and State Securities Commission raising the ceiling for foreign investors in listed companies from 49 percent to 60 percent.
The construction ministry suggested that foreigners be allowed to buy homes in Vietnam.
As for progress in Ho Chi Minh City’s infrastructure network, a five-kilometer section of the Tan Son Nhat – Binh Loi outer ring road opened to traffic on September 27.
The Saigon 2 Bridge linking Districts 2 and Binh Thanh was finished in mid-September and will be opened in early November.
These two works are expected to ease traffic congestion in the city and move forward real estate projects clustered alongside them.
The rise in the number of new launches represented a refound confidence among some developers like Capitaland, Phu My Hung Corporation, and Nam Long.
Developers’ faith in the market was repaid as new launches saw some notable buyer activity. For example, EHome 3, an affordable project in Binh Tan District, received more than 600 visitors during its launch in late September and sold over 100 units during the weekend.
Another recent launch of The Vista project in District 2 was well-received with around 50 units being sold.
The success seen in HCMC has been mirrored in neighboring provinces with a project in Binh Duong Province also reporting increased sales velocity.
The new price ranges in the high-end segment -- US$1,300-$1,600 per square meter plus other incentives -- are getting closer to buyers’ expectation.
When asked about the market’s potential at a press conference to release the report, Marc Townsend, managing director of CBRE, said: “If I were buying today, I would put my money in a high-end project in District 2 or District 7 due to the facts that pricing has become more affordable, infrastructure has significantly improved with the construction of Saigon Bridge 2, and, therefore, traveling time to the central business district has significantly shortened.”
Office, retail sectors
In the office sector, vacancy levels in the grade A and B segments fell in the third quarter thanks to limited new supply and continued demand from firms centralizing their operations and consolidating their occupational requirements, according to the report.
During the quarter net absorption in the segments was 27,720 square meters, or 31 percent up from the second quarter.
Reduced vacancy supported a 3 percent quarter-on-quarter increase in grade-A office rental rate to $32.47 per square meter per month. The rate for grade B offices climbed 3.2 percent to $18.73.
In the retail sector, with no new supply coming into the market, the negative net absorption reflected tenants’ dissatisfaction with the rentals charged at major shopping centers and the amount of foot traffic they are able to generate.
Ngoc Le, senior manager of CBRE’s Research & Consulting said: “Retailers do not actually shut down their business, they simply relocate, moving out of the overpriced central retail centers to high-street shophouses in the center or on the periphery, which offer more affordable rates and attract larger footfall.”