Subdued transaction volume persists

• In 4Q23, High-end Apartment sales recorded only 39 transactions, with a quarterly rate of merely 2.3% given the lack of new supply. Most transactions were from a few projects that offered substantial discount policies for quick payment options. Flexible payment policies such as discounts, deferred payment policies and interest rate support were still the strategies used to stimulate demand.
• The RBL market recorded limited transactions, with 58 units sold in 4Q23, down 74.8% y-o-y. The quarterly absorption rate improved slightly but remained low at 15.1%, and likewise, the annual absorption rate reached only 30.9% (down 60 ppts y-o-y). Limited new supply, ongoing buyer caution and high-priced inventories contributed to the quiet transaction environment.

Supply is still scarce and has not improved

• The High-end Apartments market did not record any new supply in the fourth quarter. The total supply in 2023 stood at 4,898 units, down 6.1% over the same period in 2022. Most developers remained cautious about launching as market sentiment has not yet improved. Some projects have even pushed back their launch events to 2024.
• The RBL market recorded 37 new launches from Sen Vang Town, a small project that was soft-launched in 2022. With only 180 units launched throughout the year, 2023’s new supply set a ten-year record low. The main causes were the delay in project introduction amid a market downturn and the stagnation in legal and construction progress of soft-launched projects that have not yet qualified for SPA.

Selling price remains stable

• The primary price in the High-end Apartment market was USD 5,087 per sqm, almost unchanged q-o-q but down by 12.7% y-o-y. While most projects kept prices stable, some with high inventory offered up to a 40% discount for quick payment, affecting the average. Capital values increased by 1.5% q-o-q at USD 3,444 per sqm, driven by stable demand for projects with prime locations and high quality.
• Rents continued on an upward trend, increasing by 1.8% q-o-q and 6.3% y-o-y, at USD 9.9 per sqm per month. This notable increase was due to high rent in the first ultra-luxury project, Grand Marina (USD 380-400 per sqm per month) which joined the market in 4Q23. With additional leasing options available due to new completions in the market, landlords have had to lower rents to attract tenants.

Outlook: Market sentiment is expected to recover slowly

• In 2024, the High-end Apartment and RBL markets are expected to welcome about 4,900 new units and 2,400 new units, respectively. However, new launch events are expected to be active only in the second half of 2024. Demand is forecast to remain at the current low level until new supply shifts to the lower-price segment, and interest rate fluctuations as well as the economic situation level off.
• Since the new housing law is not expected to take effect until 2025, the market situation is unlikely to significantly change in the next 12 months. Developers and buyers are therefore likely to continue to take a cautious “wait-and-see” approach. The completion of higher-priced projects in the future is set to boost capital value growth in both segments in 2024, backed by limited new supply.