APPD Market Report Article

Ho Chi Minh City

December 1, 2021

-13.6%

USD 8.2

Rents
Falling

Demand remains resilient amidst the fourth COVID-19 wave

  • The restricted new supply in 3Q21 and the lockdown period that hampered buyer due diligence resulted in a fall in high-end apartment sales volume, which totalled 686 units, down 31.9% q-o-q. The two new high-end projects located in new urban areas in District 2 attracted both investors and owner-occupiers were the primary contributors to the total units sold in the quarter.
  • In the villa/townhouse sector, 3Q21 sales volume reached a record low, at only 47 units, down 74% q-o-q. This was mostly due to the strict lockdown conditions and limited available units on the market. As of end-3Q21, there were just three units left, attributable to limited new launches and healthy market demand.

New supply reaches an all-time low

  • The number of new launches in the high-end apartment sector fell to 602 units, a 44% decrease q-o-q, due to multiple launching events that were postponed during the lockdown period. Remarkably, new high-end supply expanded into outer districts. Meanwhile, there were no new launches in the villa/townhouse segment as the lockdown hindered launching events and site visits.
  • Developers emphasised the use of digital technology to reach out to customers during the lockdown period. Nonetheless, the technology proved to be merely a means for connecting with purchasers rather than a true supporter of transactions. Buyers still prefer to personally visit the show houses and perform site inspections before making any purchasing decisions.

Selling prices keep increasing

  • In 3Q21, net effective rent for the high-end apartment sector was USD 8.17 per sqm per month, down 1.8% q-o-q and 13.6% y-o-y. The fourth COVID-19 outbreak strongly impacted leasing activity in HCMC when citizens were restricted from going outside during the third quarter.
  • In contrast to the rental market, developers maintained an upward pricing trend in light of restricted supply, bringing the primary selling price of high-end apartments to a new record high. High-end primary prices improved notably, by 3.9% q-o-q. In the villas/townhouses sector, primary selling prices continued to record a robust growth at 9.6% q-o-q due to limited supply on the market.

Outlook: Market to rebound quickly after the fourth COVID-19 outbreak

  • Since early October, a ‘new normal’ has been observed in HCMC, and it is expected to boost launching events after the extended social-distancing period. The 4Q21 supply is expected to recover, with around 6,000 units in the high-end apartment and 900 units in the villas/townhouses market.
  • Short supply in the face of strong demand assisted the upward trend in primary selling prices. Constantly increasing selling prices will keep driving new supply to further reaches of the city.

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

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