Affordable segment absent as high-end dominates HCMC apartment supply

The affordable segment has been conspicuously absent as a string of Ho Chi Minh City housing projects open for sales in the second half of the year.

New apartment supply in HCMC has been in the high-end segment, while medium and low-end apartments are found in nearby provinces like Binh Duong, Dong Nai, and Long An, says a report by batdongsan.com.vn, a popular real estate website in Vietnam.

The serious dearth of affordable housing negatively impacts social security for residents in this megacity. The situation will not improve in the remaining months of the year with upcoming supply also focused on high-end and medium segments, analysts said.

For example, phase 2 of MT Eastmark City in Thu Duc city, invested by Dien Phuc Thanh Company, would offer apartments at VND39 million ($1,670) per square meter, the cheapest level on the market.

The 9 Stellars project in Thuc Duc city, invested by Ngan Thanh Company, would open its phase 2 output for sales with an expected price of VND68 million per square meter.

Meanwhile, Thao Dien Green, also in Thu Duc, is expected to launch its units at VND118 million ($5,040) a square meter onwards.

Fiato Premier by Hung Phu Invest in Thu Duc, Stella Residence of Kia Group in District 5, and Salto Residence of SCC in Thu Duc are poised to sales at VND52 million, VND116 million and VND59 million per square meter, respectively.

HCMC will also welcome several shophouse projects like The Classia by Khang Dien, Eco Green Saigon by Xuan Mai Company, and others in Phu My Hung Urban area including Grand View, The Panorama, Scenic Valley 2, Hung Phuc Premier, and Riverside Residence.

Second quarter supply

Most of the new supply in Q2 was close to high-end or high-end, according to batdongsan.com.vn. 14,000 new apartments were put on sale in HCMC in the period. Of those, 83% were high-end ones with prices above VND50 million ($2,130) per square meter.

Average prices of high-end apartments had increased 7% year-on-year in H1 and there were no properties priced at below VND40 million per square meter, it notes.

Similarly, data compiled by CBRE Vietnam shows that the average primary price of apartments in the city in Q2 was VND57 million per square meter, up 8.6% year-on-year.

HCMC recorded 900 apartments for sale in Q1 and 15,528 one in Q2, signalling a strong post-pandemic recovery.

The eastern part of the city, especially Thu Duc city, accounted for 88% of the new supply.

High-end products dominated the market with 93% share of the total new supply in Q2, while affordable apartments have disappeared from Q1 of 2019.

The continuous increases of property prices have contributed to restructuring of product segments in the new supply, driving the growth of primary prices.

The market recorded 11,259 transactions of properties in Q2, up by 1.4-fold year-on-year. Notably, the absorption rate in the period remained at the same level of 72%.

Duong Thuy Dung, senior director, head of professional services at CBRE Vietnam, said the market has witnessed changes in the mindset of investors following the pandemic, with green and health-friendly elements factored into projects.

She said localities adjacent to HCMC would witness major development thanks to improvements in the infrastructure connecting them with HCMC and rising prices in the southern metropolis.