Danang realty market plummets in supply, demand
The central city of Danang and its surrounding areas witnessed a decline in supply and demand in the property market in 2023, apart from in the apartment segment, according to real estate consultancy DKRA Vietnam.
Gloomy atmosphere
In the land plot segment, new supply decreased about 26% from the previous year, the lowest level in the past five years, DKRA Vietnam said in a new report.
New supply mainly came from Danang and its neighboring province of Quang Nam, accounting for 58% and 42%, respectively. Thua Thien-Hue province continued to see a scarcity of new projects for sale.
Transactions were at a very low level, only 15% of the previous year's figure. They took place mainly in the first half of the year, focusing on products priced at VND44.5-59.5 million ($1,808-2,420) per square meter (psm) in Danang and VND10.6-11.3 million ($430-460) psm in Quang Nam.
The secondary market recorded an average decrease of 8-10% compared to the beginning of last year, mainly in projects with legal problems, delayed implementation, and slow handover of ownership certificates to buyers.
The bright spot in the real estate picture of Danang and its surrounding areas was the apartment segment. New supply and primary market supply increased by 28% and 29% respectively compared to 2022, mainly in Danang. Projects were concentrated in Ngu Hanh Son district, accounting for 67% of total primary market supply.
Transactions were seen in mid-end projects with prices ranging from VND50-60 ($2,030-2,438) million per square meter, with full legal status and developed by reputable investors with financial strength.
Selling prices in the primary market recorded a slight rise of 3-5% for the next phases of projects with many discounts for quick payment and principal and interest grace periods applied by developers.
In the townhouse/villa segment, primary market supply continued to fall more than 46% over the same period the previous year, coming mainly from inventories from previous years which accounted for 73% of total supply.
A series of projects were suspended due to legal problems, capital shortages, weak investor sentiment, and plunging liquidity from the middle of Q2/2022.
Demand was low, with absorption rate only equivalent to 6% of the previous year’s tally. Transactions were mainly seen in the semi-detached housing group with an average price of less than VND10 billion ($406,420) per unit.
For the resort real estate segment, primary market supply remained at a low level, equal to 62% over the same period in 2022, mainly in Quang Nam and Thua Thien-Hue provinces, accounting for about 86% of total supply.
Overall demand recorded the lowest level in the past five years and was equal to 7% of the 2022 figure. Transactions decreased in most projects and were recorded mostly in projects that had been completed, handed over and operated by famous brands.
Regarding townhouses/shophouses, primary market supply continued to plunge, only equivalent to 6% of the 2022 same period, most of which came from projects that opened for sale in previous years but no transactions were recorded.
The selling prices in the primary market did not see significant year-on-year changes, ranging from VND7.1-16.3 billion ($288,560-662,470) per unit. The secondary market continued to be gloomy, with no transactions recorded.
For condotels, primary market supply dropped significantly, equal to 61% of the same period in 2022, mainly coming from inventories of old projects that had opened for sale previously.
Transactions were at the lowest level in the past 10 years, equal to 3% of 2022, mainly seen in products priced at VND3-4 billion ($121,930-162,570) per unit.
Apartment segment to lead market
According to DKRA Vietnam, in 2024, the land plot market in Danang and its surrounding areas is expected to decline slightly compared to 2023, with around 450-550 plots. Supply will mainly come from previous sales stages.
Prices in the primary market will continue to move sideways compared to 2023, with stimulus packages offered by developers. Liquidity and prices in the secondary market will continue to decline.
New supply in the apartment segment is expected to increase slightly compared to 2023, hovering around 800-1,000 units, mostly in Danang.
The Grade A apartment segment will continue to account for a large proportion of the new supply, mainly in Ngu Hanh Son district with prices ranging from VND50-65 million ($2,030-2,640) per square meter.
For the townhouse/villa segment, new supply is expected to continue being scarce and equivalent to 2023's tally, at around 200-250 units.
Demand may increase slightly compared to 2023, focusing on projects with full legal status.
Regarding resort real estate, supply in Danang and its surrounding areas will remain at a low level, around 30-50 units in total.
Market liquidity is expected to continue facing many difficulties such as legal bottlenecks that have yet to be removed. Selling prices in the primary market will remain stable and unchanged compared to 2023.
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