Affordable housing to lead Vietnam property market recovery: experts
Affordable housing will lead the Vietnamese real estate market recovery this year as even in the most difficult times, this segment still draws great attention from customers, said experts.
Data from the Vietnam Association of Realtors (VARS) shows that the proportion of affordable apartments (under VND25 million or $1,023 per square meter) in the total housing supply has continuously decreased, from 30% in 2019 to 7% in 2022 and 6% in 2023.
In the 2019-2022 period, the proportion of mid-end apartments (VND25-50 million or $1,023-2,034 per sqm) also fell to 54%, 46%, 34%, 27% respectively, with the supply mainly coming from high-end products priced at VND40-50 million ($1,626-2,034) per sqm.
Meanwhile, real needs have always led the housing demand structure, accounting for up to 80%, while 15% is for long-term investment and 5% for speculation. But only 25% of people with real housing demand have the financial ability to buy a home.
In that context, VARS assessed that, along with social housing, affordable housing will be the main and strong development trend in the real estate market in the coming period as it meets the actual needs and capabilities of the majority of people.
According to VARS, rapid economic growth and urbanization have increased demand for housing while supply has continuously declined and has not yet shown signs of expanding since 2018, resulting in an increasingly big gap between supply and demand.
"The supply structure is increasingly leaning towards high-end and high-value products, serving investment and speculation purposes. This prolonged supply-demand mismatch has caused housing prices to continuously increase to levels far beyond the payment ability of the majority of buyers, especially young people," VARS said.
VARS chairman Nguyen Van Dinh held that developing affordable housing will open up opportunities to fill the gap between supply and demand, meeting the housing needs of the majority of people with average and near-average incomes, thus pulling down prices across the entire market.
Anticipating market recovery
Even in the general gloomy context of the real estate market in 2023, the affordable housing segment still received special attention from customers with stable transaction levels. Meanwhile, the high-end and luxury segments almost "stood still" in the past year.
Kim Lien, sales director of Dat Xanh Services, said that in terms of demand, last year, about 67% of customers were interested in apartments priced under VND2.5 billion ($101,730), 21% had demand for apartments worth VND2.5-3.5 billion ($101,730-142,420), and less than 3% for those worth over VND5 billion ($203,460).
"The actual demand for the high-end real estate segment this year is quite low. People will prefer low-cost houses and affordable apartments, but there aren't enough of these products," she said.
One of the factors that make customers hesitant to buy real estate is they do not have enough money and are not confident enough about their current incomes, Lien noted.
"Many customers said that they cannot find products that are suitable for their finances and are not confident enough to borrow a large amount of money to buy real estate even though lending interest rates have decreased. Buyers want to purchase houses at affordable prices while the market mainly offers those in the high-end segment," she said.
Meanwhile, Thanh Thao, sales director at Phu Dong Group, held that in 2022-2023, the real estate market suffered general difficulties. However, the segment from VND2-3 billion ($81,320-122,000) still recorded the interest of customers and there was a certain amount of purchases and transfers, creating liquidity for businesses.
According to Thao, affordable housing projects will "heat up" the real estate market in 2024. Around the end of 2023 and early this year, many new affordable projects were launched. Most recently, Phu Dong Group introduced the Phu Dong SkyOne project in Di An town, the southern province of Binh Duong.
Phu Dong SkyOne is an apartment project serving real housing needs, she said, adding it will be built on an area of 5,615 sqm with investment capital of VND1.1 trillion ($44,724), including two 30-storey apartment blocks, each with one basement. Once completed, it will supply 780 apartments with areas ranging from 42-75 sqm.
This project is expected to be launched in March 2024 with an expected selling price of VND1.4-2.2 billion ($56,900-89,400) per apartment, of which 75% are priced from VND1.4-1.8 billion, meeting the needs of the majority of young families. The apartments are expected to be handed over in December 2025.
Also in this segment, Nam Long Group will launch Ehome Southgate in Ben Luc district, the Mekong Delta province of Long An, with prices starting from only VND1.1 billion ($44,730) per unit.
In Ho Chi Minh City, this developer’s affordable apartment projects include Akari City in Binh Tan district with prices starting from only VND43 million ($1,750) per sqm; and Mizuki Park in Binh Chanh district from VND46 million ($1,870) per sqm. In the 2024-2025 period, Nam Long also plans to provide the market with more than 3,000 low-cost and affordable housing products.
In addition, many other affordable projects such as MT Eastmark City of Dien Phuc Thanh and 9X An Suong of Hung Thinh Land will also be implemented in 2024.
To catch the market recovery, many experts believe that businesses need to reduce profit margins and adjust selling prices to draw cash flow. In addition, they must also have strategies to bring affordable housing products to customers.
- Read More
Petrovietnam units sign LNG supply deal for trial run of Vietnam’s first LNG power plants
PV Power and PV Gas, two units of state-owned Petrovietnam, have signed an LNG supply deal for trial operation of Nhon Trach 3 and Nhon Trach 4, Vietnam’s first LNG-to-power plants.
Energy - Thu, November 21, 2024 | 4:40 pm GMT+7
Sufficient first phase funds ensured for Vietnam’s new mega airport: transport minister
Minister of Transport Nguyen Van Thang affirmed Wednesday that funding would be secured for building the Long Thanh International Airport, set to become Vietnam’s biggest.
Infrastructure - Thu, November 21, 2024 | 3:53 pm GMT+7
VAFIE to organize workshop on amendments to horse racing, football betting rules
The Vietnam’s Association of Foreign Invested Enterprises (VAFIE) and The Investor will organize a workshop on suggestions to amend the government’s Decree 06 on horse racing, greyhound racing and international football betting services.
Economy - Thu, November 21, 2024 | 2:38 pm GMT+7
Vietnam Politburo okays international, regional financial centers in HCMC, Danang
Vietnam’s highest decision-making body, the Politburo, has greenlighted the establishment of an international financial center in Ho Chi Minh City and a regional financial center in the central city of Danang.
Economy - Thu, November 21, 2024 | 1:50 pm GMT+7
Singapore's Platinum Victory seeks to gain veto at Vietnam’s REE
Singaporean fund Platinum Victory Pte. Ltd. has registered to buy more shares of Ho Chi Minh City-based utility firm Refrigeration Electrical Engineering Corporation (REE) to achieve the vetoing power in the latter.
Finance - Thu, November 21, 2024 | 11:29 am GMT+7
Posco keen on investing in Vietnam's $2.2 bln LNG power project
South Korea’s steelmaker Posco is eyeing to invest in the $2.2 billion Quynh Lap LNG-fired power plant project in Vietnam’s central province of Nghe An.
Energy - Thu, November 21, 2024 | 10:42 am GMT+7
Vietnam firm Hoa Lam to build $212 mln Aeon Mall in Mekong Delta
The Mekong Delta city of Can Tho has accepted a subsidiary of private multi-sector Hoa Lam Group as the investor of the Aeon Mall Can Tho commerce and service center.
Industries - Thu, November 21, 2024 | 10:31 am GMT+7
Vietnam startup expert closes Monkey in Black coffee shop
Tung BT (Tran Thanh Tung), a popular startup expert and social media influencer, is closing his final coffee shop in Ho Chi Minh City, ending a 10-year journey of the "Monkey in Black" brand.
Companies - Thu, November 21, 2024 | 8:16 am GMT+7
Vietnam-Singapore ties set for elevation to comprehensive strategic partnership
Vietnam and Singapore will elevate bilateral ties to a comprehensive strategic partnership and Singaporean Prime Minister Lawrence Wong will visit Vietnam next year.
Politics - Wed, November 20, 2024 | 8:16 pm GMT+7
Vietnam’s Vingroup establishes robotics firms, with co-founder’s 2 sons as major shareholders
Vingroup, Vietnam’s largest private conglomerate by ecosystem, has set up a robotics unit as it moves to ramp up its industrial-high technology ecosystem.
Companies - Wed, November 20, 2024 | 6:17 pm GMT+7
E-commerce, digital platforms likely to pay taxes on behalf of their sellers in Vietnam
E-commerce and digital platforms will have to declare and pay taxes on behalf of their sellers starting January 1, 2025, according to a draft amendment to the Law on Tax Administration.
Finance - Wed, November 20, 2024 | 5:37 pm GMT+7
Flexibility, adaptability key to effective leadership: PepsiCo Vietnam exec
In a rapidly changing world, leaders need to develop the skill of being “as flexible as seaweed,” says Nguyen Viet Ha, general director of PepsiCo Foods Vietnam.
Companies - Wed, November 20, 2024 | 3:52 pm GMT+7
Central Vietnam province okays $88 mln automobile part project
Binh Thuan province's industrial zone authority on Tuesday granted an investment registration certificate to a $88 million project invested by Taiwan’s NeoSCM Limited.
Industries - Wed, November 20, 2024 | 3:44 pm GMT+7
Thai packaging firm Thantawan Industry makes inroad into Vietnam
Thantawan Industry Public Company Limited, a leading Thai manufacturer of premium plastic packaging, has inked a deal for a 30-year factory lease, marking its inaugural investment in Vietnam.
Industries - Wed, November 20, 2024 | 3:34 pm GMT+7
Developer Novaland gets legal hassles cleared for satellite urban area bordering HCMC
Major property developer Novoland has had legal obstacles for its Aqua City project cleared after Dong Nai Chairman Vo Tan Duc approved Tuesday a critical adjustment to the southern province’s urban development plan.
Companies - Wed, November 20, 2024 | 2:29 pm GMT+7
Pegatron to quadruple workforce at $800 mln project in Vietnam
Pegatron Vietnam, a subsidiary of Taiwanese electronics manufacturer Pegatron Corporation, is set to soon quadruple the company's workforce for its $800-million project in Vietnam.
Industries - Wed, November 20, 2024 | 2:03 pm GMT+7