APPD Market Report Article

Ho Chi Minh City

May 26, 2024

Trang Le, Head of Research, Vietnam

5.9%

USD 10.0

Rents
Rising

Subdued transaction volume continues

  • The High-end Apartment market recorded 465 units sold in 1Q24, mostly from The Metropole Opera, the new project that has just obtained its license. The remainder came from unsold inventory from the previous quarter amidst a sharply reduced supply. Developers continued to offer discounts, extended payment terms and offered various payment options to entice buyers after the long Tet holiday.
  • The RBL transactions fell by 34.5% q-o-q, with a mere 38 units sold. This was mainly due to the dominance of high-priced inventories exceeding USD 1 million per unit and the cautious attitude of buyers towards assets with less liquidity compared to apartments, amidst economic uncertainty. Besides this, the extended Tet holiday also contributed to the muted transaction activity.

Developers adopt a ‘wait-and-see’ strategy

  • Only one project, The Metropole Opera (347 units), in the High-end Apartment market obtained licences to sign SPA contracts. Developers adopted a ‘wait-and-see’ strategy as the market remained subdued. Some projects began to collect new bookings but did not attract much interest from homebuyers, given market uncertainties and the shift in real demand towards more reasonably priced projects.
  • During 1Q24, the absence of new launches in the RBL market led to the limited primary stock of around 300 units. The supply scarcity was attributed to the developers’ delay in launching new projects in the midst of a market downturn. Moreover, some soft-launched projects were hindered by a stagnation in construction progress, preventing them from moving to the stage of SPA signing.

Selling price remains stable

  • Rents continued the upward trend with an increase of 1.6% q-o-q and 5.9% y-o-y, at USD 10.0 per sqm, per month. This was driven by high rent prices recorded in new high-quality completions, while the rest of the market remained stable. 
  • The High-end Apartment primary prices recorded a q-o-q rise of 2.6%, reaching USD 5,218 per sqm, due to the removal of lower-priced projects from the primary basket after being sold out. On a project basis, the asking price of most projects remained stable, and developers continued to offer discount policies to entice buyers. Capital values remained stable, with a modest increase of 1.6% q-o-q. 

Outlook: A brighter prospect is expected in the second half of 2024

  • In the next nine months, the High-end Apartment and RBL markets are expected to respectively welcome about 4,200 and 1,500 new units. However, new launch events are expected to be active only in the second half of 2024. Demand is projected to stay low until new supply moves towards the lower-priced segment, and there is greater stability in the economy and interest rates.
  • Since the new laws are not set to take effect until 2025, the market is unlikely to undergo substantial change throughout the remainder of 2024. Both developers and buyers are expected to adopt a cautious approach. The possible selling price adjustment is subject to a great deal of uncertainty, depending on the number of projects that can be launched and the economic situation in the short term.

Note: Ho Chi Minh City Residential refers to Ho Chi Minh City's high-end apartment market.

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