Hanoi, HCMC apartment prices keep bucking real estate downtrend

Despite the liquidity gloom pervading the real estate market, apartment prices in Hanoi and Ho Chi Minh City have been increasing constantly.

Since 2015, apartment prices in the capital city and the southern economic hub have risen 56% and 82%, respectively, according to a Construction Ministry report.

Apartments were the real estate segment least affected by unfavorable market conditions in the third quarter of this year because they serviced real housing needs, the report notes.

Interest in apartments has shown signs of revival in Q3 with demand for buying and renting up 1% and 6% over the previous quarter, respectively. Apartments priced at VND2-4 billion ($164,780) were the most sought-after.

The report says there are signs of good absorption rates in big cities, particularly of apartments and houses priced under VND10 billion ($411,950) in the central areas.

In Hanoi’s primary market, the average selling price of newly launched apartments in Q3 increased by nearly 7% compared to Q2 and up 14% year-on-year, reaching about VND50.8 million ($2,093) per square meter (sqm).

Since the new supply was dominated by the high-end segment (over 90%), the selling price has showed an upward trend. At the same time, investors in other segments lowered their prices and launched more sales programs for upper floors, according to the report.

The average selling price on the capital city’s secondary market also rose from the previous quarter, topping VND32 million ($1,318) per sqm, up 2.7% quarter-on-quarter and 0.8% year-on-year.

Secondary market selling prices increased in all Hanoi districts in Q3 compared to Q2. In the districts of Dong Da, Thanh Xuan, Tay Ho, Nam Tu Liem, and Gia Lam, prices rose by more than 3%.

The report highlights some projects in the affordable apartment segment (VND25-35 million or $1,030-1,440 per sqm), including Anland Premium Duong Noi in Ha Dong district (VND31 million/sqm) and Phuong Dong Green Home in Long Bien district (VND32 million/sqm).

In the high-end apartment segment (over VND50 million or $2,060/sqm), the report mentioned the Nosta project in Dong Da district, which carries prices of VND60-75 million ($3,090) per sqm.

High-end, luxury domination

In HCMC, about 60% of new supply in Q3 came from an urban area project in the east.

Notably, over 96% of the new supply in Q3 came from the high-end segment and the remaining 4% coming from the luxury segment, from a project in the Thu Thiem New Urban Area. The primary market selling price of apartments in HCMC exceeded VND60 million ($2,470) per sqm in Q3.

The average price on the HCMC secondary market was VND45 million ($1,853) per sqm in Q3, up 3% from Q2. Secondary market prices in the luxury and affordable segments remained mostly unchanged in Q3 compared to Q2.

The overall price increase was primarily due to secondary market price hikes in the high-end and mid-end segments, especially for projects adjacent to the downtown area, such as Binh Thanh district and Thu Duc city.

In the affordable segment, the Diyas Sky studio apartment project in Tan Binh district offered the price of about VND25.5-32 million ($1,320) per sqm; while the figure for a Citi Alto apartment is about VND29-34 million.

In the mid-end segment, the An Gia Skyline project in District 7 costs about VND39 million per sqm; Happy Valley in District 7, about VND48.2 million; and the Royal Park Riverside in District 8, about VND35 million.

In the high-end market, typical developments like The Beverly Solari-Vinhomes Grand Park in Thu Duc city had prices of VND47-66 million ($2,720) per sqm, while they soared at Empire City and The Monarch to VND200 million ($8,240).

Commenting on apartment prices in Hanoi and HCMC, Batdongsan.com.vn - a key proptech business in Vietnam offering sales and marketing solutions, noted that apartment listing prices only increased slightly by 1-5% in Hanoi and was almost flat in HCMC this year.

However, from 2015 to present, the increase in apartment prices exceeded the growth in people's incomes. Compared to the 56% and 82% increases in Hanoi and HCMC apartment prices over eight years, respectively, the income of people in urban areas increased by just 39%.

Several reports have pointed out that purchasing an apartment has become increasingly difficult as income growth falls far short of the increase in prices. Despite this, primary market apartment buildings will have high prices in the future as costs rise and investors look to maximize profits, they say.

A Savills Vietnams report says the average price of primary market apartments Hanoi has increased for 19 consecutive quarters and stands at 77% higher than Q1/2019.

In HCMC, a Cushman & Wakefield report says the average primary market price in Q3 was almost unchanged compared to Q2 but up 15% year-on-year.