Mid-end seg­ment to dom­i­nate prop­erty mar­ket

The real es­tate sec­tor an­tic­i­pates a strong year for rea­son­ably priced hous­ing de­vel­op­ments

Viet Nam News - - PROP­ERTY -

HAØ NOÄI — Vieät Nam’s real es­tate mar­ket will see strong de­vel­op­ment in the mid­dle-end apart­ment seg­ment, ac­cord­ing to ex­perts.

“2019 is ex­pected to con­tinue to be the year of the mid­dle-end prod­uct mar­ket, with a rea­son­able price that is suitable for the bud­get of most peo­ple,” Döông Ñöùc Hieån, Di­rec­tor of Res­i­den­tial Sales at Sav­ills Haø Noäi, said at a press con­fer­ence re­leas­ing a re­port on Haø Noäi’s prop­erty mar­ket in the fourth quar­ter of 2018 held in Haø Noäi this week.

In ad­di­tion, shop- houses, landed prop­erty and prod­ucts that are built near con­ve­nient ser­vices will also at­tract end-users, Hieån said. The mar­ket still has high de­mand for those prod­ucts be­cause of mi­gra­tion trends from other prov­inces and cities to large cities, the trend of sep­a­rat­ing house­holds and de­graded hous­ing in cities.

The mar­ket is not ex­pected to wit­ness new kinds of prop­erty, he said. The ex­ist­ing prop­erty prod­ucts will see ad­just­ments to make them more suitable to the de­mands of cus­tomers. For in­stance, the mar­ket will not see 90- sq. m apart­ments with three bed­rooms, be­cause the rooms are too small. Mean­while, apart­ment de­sign will ex­pand to bal­conies, log­gia, and win­dows to catch nat­u­ral light. These trends are ex­pected to help the hous­ing mar­ket achieve sus­tain­able de­vel­op­ment.

Leâ Vuõ Thanh Taâm, ex­pert from the Eco­nomic and Fi­nance Academy, said pos­i­tive fore­casts on Vieät Nam’s macro eco­nomic de­vel­op­ment in­di­ca­tors would sup­port the stable de­vel­op­ment of the real es­tate mar­ket this year.

With the free trade agree­ments (FTAs) that Vieät Nam has joined and pos­i­tive im­pacts from In­dus­try 4.0, Vieät Nam will re­ceive more for­eign in­vest­ment from funds and new projects, in­clud­ing more cap­i­tal for the prop­erty sec­tor, Taâm said.

Ac­cord­ingly, there will be about 2.5 to 3 mil­lion peo­ple from ru­ral ar­eas mov­ing to the city, along with tens of thou­sands of for­eign work­ers and engi­neers, so hous­ing de­mand will surge in many seg­ments.

Mean­while, the sup­ply is ex­pected to drop be­cause there aren’t many avail­able apart­ments from old projects and the mar­ket will not see many new projects due to a lack of land and low fi­nan­cial abil­ity of in­vestors, Taâm said. The de­mand will in­crease pres­sure and push prices up.

Taâm also said the State has taken ac­tion to limit credit for real es­tate and se­cu­ri­ties lend­ing but has en­cour­aged banks to in­crease loans for pro­duc­tion and busi­ness. There­fore, prop­erty projects will find it dif­fi­cult to ap­proach credit.

Along with that, the State will tighten land use plans and con­trol prop­erty projects so the real es­tate mar­ket this year is likely to cool down, mean­ing prop­erty prices are un­likely to in­crease in many prov­inces and cities, es­pe­cially Haø Noäi and HCM City. There are even some projects which may re­duce sell­ing prices, Taâm said.

With many pos­i­tive fore­casts in macro-eco­nomic de­vel­op­ment and the gov­ern­ment’s so­lu­tions to con­trol the prop­erty mar­ket, Taâm said, Vieät Nam’s real es­tate mar­ket will not see a bub­ble or freeze.

How­ever, Taâm said, the prop­erty mar­ket may face chal­lenges from changes in macro-eco­nomic de­vel­op­ment, mar­ket sup­ply and de­mand and mon­e­tary poli­cies of the State Bank.

To re­duce neg­a­tive im­pacts from those fac­tors, the state man­age­ment agen­cies and en­ter­prises in the real es­tate sec­tor need to en­sure macro-eco­nomic sta­bil­ity as well as busi­ness ac­tiv­i­ties and the state agen­cies should di­ver­sify cap­i­tal sources for busi­nesses, Taâm said.

Haø Noäi mar­ket

“This year, mid-end prod­ucts are ex­pected to keep dom­i­nat­ing the Haø Noäi mar­ket with the launch of town­ship de­vel­op­ments,” said Nguyeãn Hoaøi An, Di­rec­tor, Haø Noäi branch of CBRE.

“For up­scale seg­ments (high­end and lux­ury), re­cent progress in prime sites in Haø Noäi sig­nals the re­turn of the lux­ury seg­ment af­ter two years with­out new sup­ply. In terms of lo­ca­tion, while more than 50 per cent of new launches are ex­pected in the west, the east is fore­cast to be more ac­tive as 30 per cent of new sup­ply is lo­cated in this area.”

“Be­fore, the po­si­tion of projects used to be the top pri­or­ity when choos­ing prop­erty prod­ucts. How­ever, with up­graded trans­port in­fra­struc­ture that is hap­pen­ing at present, the im­por­tance of po­si­tion will re­duce,” said Hieån from Sav­ills’ Haø Noäi branch.

There­fore, in­vestors need to have a long-term vi­sion for the project’s po­ten­tial af­ter 5- 10 years, when the in­fra­struc­ture is de­vel­oped, on whether the project will still at­tract buy­ers or not.

Mean­while, cus­tomers should have a more open mind for hous­ing prod­ucts, es­pe­cially when buy­ing them for long-term in­vest­ment, be­cause a dis­ad­van­ta­geous lo­ca­tion to­day could be­come ad- van­ta­geous in the fu­ture with more de­vel­oped in­fra­struc­ture. They should study this sit­u­a­tion, he said.

In 2018, con­do­mini­ums for sale in Haø Noäi con­tin­ued to see high lev­els of new launches, with around 30,000 units, ac­cord­ing to the CBRE Vieät Nam’s re­port on Haø Noäi mar­ket in the fourth quar­ter 2018 re­leased on Jan­uary 10.

Dur­ing 2018, Haø Noäi’s mar­ket has fur­ther shifted to­wards the mid-end seg­ment. The share of this seg­ment in to­tal new launches has ex­panded to 70 per cent from 63 per cent in 2017, show­ing that end-users are still a ma­jor source of de­mand in Haø Noäi. No­tice­ably, the mar­ket wit­nessed the launch of large-scale town­ships in­clud­ing VinCity Ocean Park and VinCity Sporti.

In terms of lo­ca­tion, the de­cen­tral­i­sa­tion trend con­tin­ued in 2018 when there was only 2 per cent of new sup­ply launched in the four core dis­tricts. Ad­di­tion­ally, Haø Noäi’s res­i­den­tial mar­ket has ex­panded to sub­ur­ban ar­eas with an in­creas­ing num­ber of new projects launched in lo­ca­tions out­side the 10-km ra­dius from the cen­tral busi­ness dis­tricts (CBD). In 2018, projects in sub­ur­ban dis­tricts such as Thanh Trì, Hoaøi Ñöùc and Gia Laâm ac­counted for 20 per cent of to­tal new launches.

Ac­cord­ing to Sav­ills Vieät Nam’s re­port on Haø Noäi’sar­ket in Q4, 2018, trans­ac­tions on the apart­ment mar­ket rose by 81 per cent quar­ter- on- quar­ter ( QoQ) and 69 per cent year- on- year (YoY) whilst the ab­sorp­tion rate in­creased by 9 per­cent­age points (ppts) QoQ and 5 ppts YoY to 34 per cent.

The CBRE re­port said the pric­ing level of Haø Noäi’s con­do­minium mar­ket was kept stable given the dom­i­nance of the mi­dend seg­ment. While Haø Noäi’s mar­ket is still an end-user mar­ket, af­ford­abil­ity still plays im­por­tant role for buy­ers. How­ever, we still ob­serve up­ward trends in sev­eral projects in the high-end seg­ment, es­pe­cially those in lo­ca­tions such as West Lake and across Ring Road No 3. — VNS

2019 is ex­pected to be the year of the mid­dle-end prod­uct mar­ket. — VNA/VNS Photo Huy Huøng

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