Affordable housing warms up Binh Duong real estate market

Housing segments that meet demand with prices of less than VND3 billion ($128,000) a unit are warming up the property market in Binh Duong province, which borders Ho Chi Minh City.

Affordable housing still attracts customers

Amid the wave of investment shifting from HCMC to its surrounding satellite areas, Binh Duong has become a hot spot compared to nearby localities as it boasts ample room for growth.

Besides, every year, Binh Duong, dubbed the industrial "capital" of the country, attracts a large number of experts and workers, raising housing demand, hence pushing up apartment prices.

Apartment prices in the southern province's primary market have recorded a sharp increase in recent years, from VND15-22 million ($938) per square meter in 2017 to VND17-60 million ($2,560) per sqm in 2022, with an average annual growth of 14%.

However, Binh Duong could not stand outside the real estate crisis in the country over the past year, seeing falling transactions. In that context, affordable segments that meet actual demand are making the local market "warm" again.

Thanh Thao, Phu Dong Group's sales director, said that since the end of 2022, Binh Duong's realty market has suffered from general difficulties. However, segments with prices from VND2-3 billion ($128,000) a unit have still attracted customers with relatively stable transactions, creating liquidity for businesses.

"Currently, both Phu Dong Premier and Phu Dong Sky Garden projects of our company have good liquidity with stable transactions," she said.

In the past, main property products in Binh Duong were land plots, townhouses and villas, but now affordable housing segments are thriving. Since 2020, many businesses in the province have chosen these segments for project implementation and now see certain success.

According to Thao, two factors that create the attractiveness of the affordable segments in Binh Duong are price and geographical location, especially areas adjacent to HCMC like Di An town. With more affordable prices than those in HCMC, the country’s southern economic hub, many customers have decided to buy a house in Binh Duong.

“In Di An, even land plots and townhouses have seen good liquidity, with prices dropping a bit,” she added.

In the second half of this year, Phu Dong will launch new apartment products suitable for many groups of customers with prices from VND1.2-1.5 billion ($64,000) and an area from 52-72 square meters per unit, Thao revealed.

At the end of April, the company held a topping-out ceremony for its Phu Dong Sky Garden project after 13 months of construction, marking an important milestone in the provincial housing segment for young people.

In addition to Phu Dong, many other developers in Binh Duong have paid attention to affordable segments, including Van Xuan Group with the Happy One Central project in Thu Dau Mot town; and Bcons Real Estate JSC with a series of projects in Di An such as Bcons City, Bcons Mien Dong, and Bcons Garden.

Leverage from infrastructure and FDI inflow

Real estate consultancy DKRA Vietnam said in its early March report that in contrast to the bustling primary market, the secondary market in Binh Duong recorded a decline in both price and liquidity, especially from the end of Q2/2022.

Transfer prices in the secondary market in February 2023 continued to decline. For projects that have handed over housing to foreign investors, the prices remained unchanged over the same period. However, prices of houses owned by domestic investors recorded a year-on-year decrease of 5-10%.

The market saw many investors accept to cut losses to solve financial difficulties or restructure cash flow. In addition, under the pressure of credit control and high interest rates, the decline of the secondary market is expected to linger until the end of the year.

According to DKRA, in the first quarter of this year, in the apartment segment, new supply in Binh Duong accounted for only 19.9% of the province’s total supply with 1,378 units. The highest apartment price was VND53.8 million ($2,300) per sqm, while the lowest was VND26.6 million ($1,130) per sqm.

In the townhouse and villa segment, new supply made up 76.3% of total supply. With plunging market demand, consumption was mainly seen in projects with prices below VND3 billion ($128,000) a unit.

Prices of new offerings fell 9-25% on average from before. Liquidity in the secondary market remained very low, with a year-on-year price decrease of 8%, focusing on customer groups using loans.

However, Binh Duong holds many advantages to make its real estate market vibrant again, including good infrastructure and large FDI inflow. In the first two months of this year, Binh Duong attracted $340.59 million in registered FDI capital, which includes newly registered capital, additional capital of operational projects, and capital contributions for stake acquisitions, soaring 441% year-on-year.

The province's real estate sector saw two capital contribution or share purchase deals worth $324.1 million, accounting for 89.9% of total registered FDI capital.

Binh Duong is located at the center of the southern key economic region, with convenient transport infrastructure.

Since 2019, the real estate market in HCMC has experienced a fall in supply, high prices, and bottlenecks in policies and mechanisms, causing developers to come to Binh Duong, which boasts a favorable investment environment, a huge land bank with more attractive prices, and great development potential.