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Report

Vietnam Property Market Brief Q1 2016


2016 still remains a positive year for Vietnamese real estate market!​

Macroeconomics: despite the lower GDP growth compared to 1Q15, the number was still higher than first quarters of 2011-2014 periods. This was partly due to the impact of climate change to agricultural production. It is too early to say whether the economy will slow this year as Vietnam’s economic growth typically accelerates towards year-end.

FDI disbursement as well as of newly registered capital in 1Q16 both increased on a y-o-y basis. This confirmed that Vietnam continues to be an attractive investment destination for foreign investors.  Real estate ranked second in attracting FDI during the quarter, as newly registered capital reached nearly USD 240 million from a total of 11 projects. Among the 40 countries and territories investing in Vietnam during 1Q16, South Korea retained its top ranking at USD 513 million in newly registered capital, followed by Singapore at USD 449 million and Taiwan at USD 386 million.

Tourism activities reported a strong start to the year with foreign arrivals to Vietnam recovering and reaching a record high of 2.4 million in 1Q16, an increase of 19.9% compared with 1Q15. The number of Chinese visitors to Vietnam soared by 65.9% y-o-y in 1Q16, while the number of South Korean visitors was also 30% up compared to 1Q15. Other markets that benefit from the similar visa policy saw increases of between 6% and 28% in 1Q16. 

Residential market: Both Ho Chi Minh City (HCMC) and Hanoi continued to achieve positive outcomes. Total new supply in both cities reached nearly 20,000 newly launched units in 1Q16, and the total number of units sold was recorded at 18,000 units, which is an impressive figure compared to that of recent years. It can be seen the market in 1Q16 continued its uptrend witnessed in 2015, with numerous projects achieving sales rates of up to 90% at launched. Condominium prices carried on the upward movement of 1-2% per quarter as expected. We believe that the market will maintain this tendency in the foreseeable future.

Office for lease market: In both cities, total net absorption attained high levels in 1Q16, with several transactions of more than 1,000 sqm each leasing contract during the quarter. In the next 12 months, office supply in CBD area is limited and therefore, the current trend of office relocation towards the vicinity will continue. As a result, rents are expected to ascend further in prime locations.

Retail market: We expect 2016 will remain a challenging year for the retail sector in Vietnam. Increased competition seen between domestic and foreign retailers and additional new supply will pose many challenges for existing retail centres. In 2016, the market is expecting the much anticipated arrival of Takashimaya, one of the leading department store retailers from Japan, which is anticipated to bring a new shopping experience to the Vietnamese consumer.

Mr. Stephen Wyatt, General Director of JLL Vietnam, comments: “The Vietnamese property market has seen 25 years of development with various ups and downs. The market is developing and maturing at a faster rate than previously seen. Developers, investors, banks and government authorities are more alert to market dynamics and prudent in their actions and roles. JLL believe in strong parameters and development of the property market in the future, and 2016, in particular, will remain a year of promising prospect despite global challenges”. 


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