Customers are now no longer interested in on-paper property projects, and have turned to those that are being completed or have been handed over as a safe choice during this volatile period, said insiders.
Gradual recovery
In the third quarter of 2023, 17 projects were launched for sale in the apartment segment in the southern region market, including one new project and 16 others in their next phases, according to real estate consultancy DKRA Vietnam. They offered 4,542 apartments, a decrease of 17% over the same period in 2022, of which 3,270 units, or 72%, were sold.
Ho Chi Minh City accounted for 87.5% of new supply in the entire market. The ratio was 7.2% and 3.1% for Binh Duong and Ba Ria-Vung Tau provinces, respectively.
Notably, the market in Q3 began to recover, with new supply 2.5 times higher than the previous quarter.
Prices in the primary market did not fluctuate much while secondary market liquidity recovered with prices recording a slight increase of 1-3% compared to Q2. Developers offered a range of attractive sales policies to stimulate demand such as discounts for quick payment, extension of payment deadlines, and gifts.
Transactions rose, not only for new projects but also from those that had already been handed over to customers. Reports by notary offices in HCMC and Binh Duong show that the notarization of real estate transactions increased sharply.
For example, Asia Notary Office in HCMC’s District 3 reported that in September, there were about 10 notarized property transactions a day on average, instead of just a few like in March, April and May.
Major enterprises such as Novaland, Hung Thinh Land and Nam Group started to recruit large numbers of sales personnel to serve their projects in Binh Thuan, HCMC, Binh Duong, Dong Nai, and Ba Ria-Vung Tau.
A Novaland representative said that after a period of halting sales and restructuring the business, the developer has recruited an additional over 1,000 brokers, and is looking for sales partners for its projects, especially in HCMC.
"Safe" products take the throne
Although the market has recovered with a strong increase in the number of new products launched for sale, many real estate experts believe that customers will choose "safe" projects to buy.
Ha Van Thien, deputy general director of Tran Anh Group, said that in the past, when the market was overheated, new projects offering future-formed products were sought after by customers due to possible high returns even though many of them faced legal problems.
However, this product line, after a period of thriving, has proven risky, with projects delayed for many years, low returns, and poor liquidity.
"These factors have made people hesitate to invest in future-formed houses, creating a new wave in the market: a wave of investing in projects that have been built and are ready to hand over," Thien said.
According to Phung Quang Hai, deputy general director of Khai Hoan Land, since the beginning of August, a large number of customers have purchased products that are already under construction, while in the past they often chose future-formed projects.
"Customers are also looking away from Ho Chi Minh City due to high prices, low returns and poor liquidity. Instead they are going to markets in the vicinity of HCMC with moderate prices, good sales policies from developers, high returns, good liquidity, and great demand," Hai said.
Real estate businesses are paying more attention to areas adjacent to HCMC such as Di An town in Binh Duong province and Bien Hoa town in Dong Nai province. The two provinces are manufacturing hubs in the south.
Di An is evaluated by analysts as the market with the most newly launched projects. Since Q2, five new projects have opened for sale by developers from HCMC.
Nguyen Thanh Thao, sales director of Phu Dong Group, said that her company is selling products at Phu Dong Sky Garden located between HCMC’s Thu Duc city and Binh Duong's Di An town. The project is nearly complete and houses will be ready to hand over to customers in Q2/2024.
"Since August, the project has seen a 10% growth in transactions, including both new purchases and repurchases," she said.
According to Thao, customers choose projects that are about to be handed over due to product safety and quality as well as developers’ sales policies. For example, Phu Dong Group has introduced a payment policy of only VND10 million ($407) per month applied to those on the payroll.
In addition, the buyer is entitled a bank loan equivalent to 65% of the apartment value for a period of 30 years, and is supported by the developer with a 6% fixed interest rate for 24 months after receiving the house in 2024.
According to Vo Hong Thang, R&D deputy director of DKRA Vietnam, customers will benefit greatly as developers are in a race in sales policies. However, this is only true for projects to be handed over in 2024.
Mentioning the real estate market in the last months of 2023, Thang believed that the market will recover at the end of 2023 and early 2024. However, it will be not a "V-shaped" recovery model as expected, but feature solid upward steps, creating momentum for sustainable development in the future.
According to Thang, from now until the first half of 2024 can be considered the beginning of the next growth cycle of the real estate market. When government efforts to remove obstacles prove effective, the public investment disbursement rate will increase, while loan and deposit interest rates are on a downward trend, so the market will see bright spots such as rising new supply focusing on affordable housing and social housing.