2Q19: Strong demand for affordable ready-built landed products with sharp supply fall in HCMC and Hanoi

Deferred approval process has led to the market’s dependence on products of subsequent phrases in existing projects for new supply .

July 05, 2019

VIETNAM, 5 July 2019 – Buyers were in high competition for the purchase of a good RBL product due to limited supply. Sales totalled 772 units in 2Q19, 22.0% higher than new launches recorded in the quarter. The ratio between the numbers of booking available stock was up to 3:1 for town house and shophouse products at a price range of USD 170,000–USD 250,000 per unit. Demand remained high, stemming from both owner-occupiers and buy-to-let investors.

Most new supply comes from subsequent phases of existing projects. New launches totalled 632 units, mainly from the following phases of Simcity, Van Phuc City and the City Land Park Hill projects. Most new supply targeted town house and shophouse products, while the stock of new villas was limited.

Similar to the apartment market, limited new supply in the RBL property market was mainly attributed to the deferred procedure in granting developers the necessary legal documents to launch projects as planned.

The primary price in 2Q19 escalated to USD 4,198 per sqm of land, up 18.7% y-o-y. This high growth rate mostly came from the record high prices in the new supply of town house and shophouse product types located in established residential areas. The average primary price for villas was recorded at USD 3,729 per sqm of land, remaining stable q-o-q on a project basis. The Villa chain-linked price growth recorded a good rate of 17.0% y-o-y.

Outlook

Similar to the apartment market, the projected number of launches during the year varies widely due to the unpredictable timeline relating to legal procedures. New launches of RBL property are expected to reach 2,200-3,300 units in 2019, 29.0% lower compared to the forecast number in 1Q19.

Given the strong sentiment, most existing projects are expected to improve their prices, especially for Low to Mid-end RBL projects.

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Download Vietnam Property Market Brief 2Q19 Here.

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