Due to the limited supply and the increasing investment demand of foreigners, the price of luxury apartments in the center of Ho Chi Minh City has continuously increased in the past 2 years. According to forecasts from some market research companies, the primary selling price of this segment may continue to increase, on average about 10% per year.
According to the core planning of downtown area. HCM City currently is about 930ha in District 1, District 3, District 4 and Binh Thanh District, most of the land fund is the commercial – finance, hotel, tourism and administration, public service … functions of the city. Therefore, the land fund to develop luxury and high-end housing projects in this area is almost no longer available.
In addition, in recent years, the trend of investment in luxury real estate in the center of big cities like Ho Chi Minh City. HCM City and Hanoi of foreign investors is increasing, especially since the Housing Law allows foreigners to own and buy Vietnamese real estate into effect. In particular, luxury apartments in District 1 center are always well received by the rich. According to CBRE research, the absorption rate in this segment is always close to 90%.
Under the project “Building a housing program for the period 2021 – 2030” of the Department of Construction of Ho Chi Minh City HCM City recently announced, the central district will limit the development of high-rise housing projects. According to this housing development strategy, in the next 5 years TP. HCM will minimize development of new projects, except for some old apartments that need new construction.
This will make District 1 downtown scarcity of new projects of luxury apartment segment. Some market research units said that this scarcity of supply could push up the price of luxury apartments in the coming years. Previously, luxury apartments in the center of District 1 have continuously increased primary prices.
According to CBRE statistics, in 2019 luxury apartment prices have increased by 17% compared to 2018, reaching the average milestone of over $ 6,000 / m2. Also according to this unit, in the first quarter of 2020, no luxury apartment projects were launched for sale. While prices continued to increase about 8% over the same period last year, reaching an average of 6,322 USD / m2.
The number of luxury apartment projects that are being built and supplied to the market is only counted on the fingers; not to mention this segment also requires a lot of rigorous factors from investors as well as customers to buy to stay. Notably, the Grand Manhattan project of Novaland Group is currently under construction on the two fronts of Co Bac – Co Giang street, attracting the attention of investors.
This project is located near 23/9 park, a few minutes walk from West Bui Vien Street and Ben Thanh Market. Novaland’s goal is to develop a commercial-luxury apartment complex in the center of District 1. On an area of 14,000m2, the project is built with 3 towers, 4 basements for car parking and Green park to 4,200m2 area is considered “rare” utilities in the expensive downtown.
Demand for high-class real estate in general, apartments in particular in the city center. Ho Chi Minh City has continuously increased over the years. According to CBRE estimates, in 2018 only 23% of high-end apartments were sold to locals, while the number of mainland Chinese visitors accounted for the largest proportion, followed by South Korean and Hong Kong customers. Kong. According to DKRA’s research, new projects with favorable locations in Ho Chi Minh City also attract Northern investors, especially investors in Hanoi usually accounting for 15-20%.
Research firm Boston Consulting Group recently said that Vietnam’s middle and wealthy class is growing very fast, which is expected to double in 2020. Foreigners are interested in buying properties in Vietnam also increased significantly when the law allows 30% ownership of apartments in a project. This is a relatively large demand for luxury and high-end real estate market.
Therefore, recently a number of agencies and organizations such as the Ministry of Construction, Vietnam Real Estate Association and Brokerage Association have proposed to expand the “room” of real estate ownership for foreigners at each project. If approved, this will be a new push for the luxury segment to continue to break out.
With these factors, many real estate experts say that luxury real estate centers in the center of big cities in Vietnam still have room and great potential, prices may increase. CBRE believes that this segment will maintain a 10% YoY price increase due to tight supply. The average price of luxury apartments from 5,000 – 10,000 UDS / m2 is significantly lower than other cities in Asia such as Bangkok, Kualar Lumpur, Singapore or Hong Kong, while the profitability rate from leasing is attractive at 6-8%.