Affordable apartments scarce in southern Vietnam: consultancy firm

Affordable apartments are becoming increasingly scarce in Ho Chi Minh City and its neighboring provinces as new supplies dry up, said property consultancy firm DKRA Vietnam.

No new supply

DKRA Vietnam’s July report on the property market in HCMC and its vicinity showed that during the month, no new projects were put on the market.

In July, new supply in the apartment segment hit 3,796 units, 3.4 times higher than in June and up 53% compared to July 2022. However, they all came from 12 existing projects, of which, 2,542 apartments were sold, up 79% year-on-year.

Of the total new supply, Ho Chi Minh City accounted for 92% and the remaining 8% was shared by neighbouring Binh Duong and Ba Ria-Vung Tau provinces.

Notably, the segment of Grade A apartments in HCMC’s Thu Duc city continued to lead the new supply, while in Binh Duong and Ba Ria-Vung Tau, Grade B and C apartments still dominated.

There were also no new projects for sale in Long An, Dong Nai and Tay Ninh provinces.

According to DKRA, market demand improved significantly compared to the previous month, but most of the sold units were located in a mega urban project in HCMC’s Thu Duc city, and were put up for sale in the month.

Developers continued to offer incentives to stimulate market demand such as discounts for quick payment, extending payment deadlines, and giving loan principal/interest grace.

Transactions in the secondary market remained relatively quiet, mainly seen in projects that have handed over houses priced at around VND2.5 billion ($104,400) per unit.

In the primary market, HCMC saw the highest price of VND185.5 million ($7,750) per square meter and the lowest price of VND43 million ($1,800).

The respective figures were VND49 million ($2,050) and VND29.5 million ($1,230) in Binh Duong; and VND46 million ($1,920) and VND32.4 million ($1,350) in Ba Ria-Vung Tau.

At these prices, it is difficult for people with real needs to buy a home, said the consultancy firm.

Something more than sales incentives needed

Experiencing the first half of the year full of ups and downs, the real estate market is witnessing a "race" on sales policies by developers. However, launching unprecedented policies is not the key to boosting liquidity as buyers only put down money for appropriate prices and legality.

Only a few projects offering prices of around VND40 million ($1,670) per square meter recorded transactions. For example, Nam Long Group's Akari City project – phase 2 in HCMC’s Binh Tan district has seen progress in sales as it offers prices ranging from VND43-47 million ($1,800-1,960) per square meter which is cheaper than other projects in HCMC at present.

Similarly, Phu Dong Group’s Phu Dong Sky Garden in Di An town, Binh Duong province, is drawing the attention of homebuyers. Apart from preferential payment policies, apartment quality and brand reputation, it offers a very competitive price, only about VND38 million ($1,590) per square meter, compared to the average level of VND45-50 million ($1,880-2,090) at many projects along Pham Van Dong Road.

The 9X An Suong apartment project in HCMC’s Hoc Mon district developed by Hung Thinh Land recorded extremely fast absorption amid the struggling real estate market, thanks to its affordable price of only VND1.6-2 billion ($68,820-83,530) per unit. This is a rare affordable project in a market flooded with high-end projects.

However, project progress and legality are things that customers are most concerned about.

Bcons City of Bcons Real Estate JSC is also an affordable apartment project near HCMC priced from VND32-35 million ($1,350-1,460) per square meter. According to the distributor, the apartments there are being bought by customers because of affordable prices and preferential loans.

According to Batdongsan.com.vn, a leading real estate website in Vietnam, there is a high demand for apartments priced at around VND40 million ($1,670) per square meter. But, such apartments are very rare, currently only seen in a few projects in the suburbs of Ho Chi Minh City.

In the current quiet real estate market, the long-term solution for developers is prioritizing products that meet the real needs and fit the financial capacity of middle-income workers. However, many subjective and objective reasons make it difficult for businesses to develop such projects, the website said.