No new rental tasks introduced in HCMC for three consecutive quarters: Savills

Ho Chi Minh City, the southern economic hub of Vietnam, saw no new apartment projects launched for sale in the three quarters of 2024, leading to a very limited supply of apartments, according to Savills Vietnam.

A report of the property consultancy on the HCMC property market showed that the primary supply decreased by 13% quarter-on-quarter and 36% year-on-year to 4,871 units.

The falling supply was attributed to a reduction in inventory and the absence of new projects for sale.

Grade B apartments accounted for the majority 60% of the supply, followed by Grade C at 38% and Grade A 2%. The eastern area (Thu Duc city) held 58% of the market share, while the western area (District 6 and Binh Tan district) 20%.

New supply included 799 units from the subsequent phases of six projects, down 30% quarter-on-quarter. Notably, five projects resumed sales with 545 apartments after their legal issues had been solved.

Savills Vietnam reported that transaction volume went down by 16% quarter-on-quarter and 4% year-on-year, totaling 1,915 units.

The absorption rate dropped by 2 percentage points from the previous quarter to 39%, but increased by 13 percentage points year-on-year. New supply achieved an absorption rate of 62%, while inventory 35%.

The Grade B segment accounted for 66% of the total transaction volume, coming from projects developed by reputable investors, with reliable construction progress and attractive sales policies.

According to Troy Griffiths, deputy managing director of Savills Vietnam, primary supply is now limited but it is expected to improve in the coming quarters thanks to the enforcement of amended related laws, updated planning, and completed key infrastructure projects.

By the end of 2024, approximately 6,700 apartments are expected to be launched, including notable projects such as The Opus One – Vinhomes Grand Park in District 9 by giant Vinhomes and The Forest Gem in Binh Chanh district by Cat Tuong Interior Decor and Construction JSC. By 2027, there will be more than 50,000 apartments from 76 projects, of them 49% are in Thu Duc city, 12% in District 7, and 9% in Binh Tan.

The expert predicted that the HCMC market will continue to lack affordable housing. By the end of the year, supply may improve but it will still primarily be in the Grade A and B segments. Residents looking for affordable homes must seek options in suburban areas or neighboring provinces like Binh Duong.

Regarding commercial housing, in the first and second quarters, HCMC had no commercial housing projects eligible for sale of future homes, according to a report from the city’s People’s Committee to the Ministry of Construction.

Townhouses, villas under VND10 billion ($403,840) preferred

Giang Huynh, head of Research & S22M at Savills Vietnam, stated that new supply of townhouses and villas is increasing but remains limited, with affordable products being launched in suburban areas.

In Q3, 145 new units were recorded, up from 10 units in the previous quarter and zero in the same period last year. They came from the new project The Meadow in Binh Chanh district and subsequent phases of The Sholi project in Binh Tan district.

Total primary supply reached 766 units, increasing by 15% quarter-on-quarter and remaining stable year-on-year. While products priced over VND30 billion ($1.21 million) continued to dominate with 63% market share, the segment below VND10 billion ($403,837) increased its market share by 14 percentage points to 29%, thanks to new projects in suburban areas. Thu Duc city led the primary supply with 67%, followed by Binh Chanh district 19%.

According to Giang Huynh, the transaction volume in Q3 reached 173 units, soaring 140% quarter-on-quarter and 170% year-on-year, with an absorption rate of 23%, up 12 percentage points from the previous quarter and 14 percentage points from a year earlier.

New projects contributed 70% of the total transaction volume, achieving an absorption rate of up to 90%. This was mainly due to developers’ reputation, clear legal status, good quality, and competitive prices.

The average primary price decreased by 14% quarter-on-quarter and 28% year-on-year to VND275 million ($11,100) per square meter, primarily because new projects in suburban areas had lower prices than the city average.

The expert emphasized that affordable products priced below VND10 billion ($403,837) saw good sales amid expensive inventory and limited primary supply. In Q3, this segment recorded 126 transactions, accounting for 73% of the total transactions in the city, with an absorption rate of 57%, up 33 percentage points quarter-on-quarter and 37 percentage points year-on-year, mainly thanks to new projects.

Meanwhile, products priced above VND30 billion ($1.21 million) had a very low absorption rate, only 7%.

She predicted that in the final quarter of the year, nearly 140 units from the next phase of a project will be launched for sale. Some other projects have postponed their launch dates to 2025 to wait for more favorable market conditions.

By 2027, the future supply is expected to reach 5,182 units. The suburban areas, including Binh Chanh, Nha Be, Cu Chi and Can Gio, will account for 59%, Thu Duc city 28%, Binh Tan 12%, and District 8 the remaining 1%.