HCMC builds thirst for apartments in 2023-2024

Vietnam's southern economic hub Ho Chi Minh City will face a severe shortage of apartments in 2023 and 2024 as very few projects have been licensed since 2019, according to an industry insider.

Nguyen Van Dung, deputy general director for sales and marketing at Tran Anh Group, said he had not seen the market this bad in nearly 20 years of working in real estate.

Since the beginning of this year, Ho Chi Minh City and neighboring provinces have faced a shortage of new apartment projects, he added.

Currently, there are three projects in the handover phase, namely the West Gate Park project of An Gia Group in Binh Chanh district, PiCity High Park under PiGroup in District 12, and Masterise Homes developed by Masterise Group in Thu Duc city.

Covering 31,000 square meters, West Gate Park has four 20-storey blocks with 2,000 apartments that have been handed over to buyers from the first quarter of 2023. The PiCity project has sold more than 300 apartments.

These are the only two projects that went on the market in Ho Chi Minh City during the first six months of 2023. Meanwhile, Masterise Homes plans to offer apartments by the end of this year.

Three other apartment projects are set to launch in 2024, while others have been pushed back to 2025.

Supply-demand gap pushes prices up

Data compiled by The Investor shows that HCMC will welcome two projects with a total 500 apartments in 2024, including one for workers in Thu Duc city and a block at PiCity in District 12.

The highlight of the southern region property market is Binh Duong province - a neighbor of HCMC, where three projects are expected to be completed. Phu Dong Group’s Phu Dong Sky Garden development in Binh Duong's Di An town is expected to offer the market 640 luxury apartments.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA), said the situation is worrying because supply is much lower than demand, causing prices to rise.

However, many experts believe there will be a silver lining for the southern market in the final months of 2023. In addition to Phu Dong Sky Garden in Binh Duong and the two projects in HCMC, new developments will go on the market, including Novaland's Aqua City and two projects being built by Hung Thinh Group in Dong Nai province’s Bien Hoa town and Binh Duong’s Thuan An district.

Pham Anh Khoi, chief economist and director of Finance-Economics-Real Estate Institute of Dat Xanh Services (FERI), gave two scenarios for the Vietnamese realty market at the end of 2023. If the situation remains difficult and investor confidence is not restored, idle money may continue to stay in the banking system, accepting lower interest rates. In the second scenario, if deposit interest rates drop to 6-7% by the end of this year, money could return to real estate.

"When the cash flow returns to the market, many people will look to investment channels with higher returns than savings. Usually the stock market will grow first, and the real estate market will follow", Khoi said.