APPD Market Report Article

Ho Chi Minh City

February 28, 2022

-0.4%

USD 8.51

Rents
Falling

Demand stays strong

  • Positive market sentiment post-outbreak has helped to increase sale transactions in high end apartment segment with 2,800 units sold in 4Q21, up 308.1% q-o-q. Eastern districts, including District 2 and 9, dominated in terms of units sold with 96% from two projects by Masterise Group in this area (Masterise Central Point – 2,066 units and Lumiere Riverside – 619 units).
  • Take-up for villas/townhouses in 3Q21 remained minimal at 214 units, but transaction and sales activities appeared to recover. Lack of inventory throughout the pandemic, coupled with demand that remained strong has supported positive sentiment about new supply in 4Q21.

Supply delayed by pandemic started to launch this quarter

  • Since the pandemic has been gradually contained, many projects that could not be launched during the lockdown period were launched this quarter. As a result, the high end apartment market in 4Q21 recorded 3,275 newly launched units, up 444.0% q-o-q.
  • Thu Duc City continues to drive market supply thanks to the establishment of the infrastructure transportation system in the area. New launches in Thu Duc in 4Q21 included Masterise Centre Point, Lumiere Riverside and Thao Dien Green Tower. Similarly, Villa/Townhouse market slowly recovered with 223 newly launched units from five projects located in the suburban areas.

Rent performance shows sign of recovery

  • Net effective rent for high end apartments obtained USD 8.51 per sqm per month, an increase of 4.1% q-o-q while still falling by -0.4% y-o-y. Relaxation of social distancing in 4Q21 helped to push up rents. Moreover, the completion of new projects with higher rents contributed to the rent uptrend.
  • High end apartment developers looked for new opportunities in suburban districts. The entrance of new large-scale projects with lower-prices reduced primary high end apartment selling prices to USD 4,512 per sqm, a -11.5% q-o-q drop. In the villas/townhouses sector, capital value stabilised at 0.7% q-o-q since new launches in suburban districts offered reasonable selling prices.

Outlook: Market to resume solid performance

  • As the new National Assembly is settled, existing legal obstacles are expected to be resolved. Accordingly, delayed projects owing to the prolonged legal procedure will likely reach the market in the next year. Over 9,780 high end apartment and 2,006 villas/townhouses are expected to enter the market in 2022.
  • Shortage of supply amid strong demand supported an upward trend in primary selling prices. Escalated selling prices and limited land banks in the inner area will force new supply in all sectors to expand to other areas.

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

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