Demand for landed properties in HCMC remains largely resilient

According to JLL latest HCMC ready-built landed property research, this was the first quarter since the legal issues started in late 2018, the market marked more than 1,000 units launched in a quarter. This was not the result of the issues being resolved, but rather the introduction of later phases and the remaining units of previous phases of the integrated Vinhomes Grand Park in District 9. Apart from this project, the market supply remained muted with many projects on hold due to delay in approval process.

The second wave of Covid-19 was short-lived and did not seem to affect the desire to own landed properties of Vietnamese people. Also, the epidemic was somehow a good catalyst for the market to filter out speculators with limited capital. Across the market, those projects with prices under USD 450,000 per unit continued to be sought after by both owner occupiers and long-term investors as they remained affordable to mass market. Those above USD 450,000 per unit in large-scale integrated projects continued to be attractive since the model “a city within a city” brought the potential for the buyers to lease out or open shops and businesses in future. Plus, the buyers were inspired by the increase in land value in such successful townships as Phu My Hung NUA, Vinhomes Central Parks and Sala integrated projects in the past few years.  Only a few projects priced more than USD 450,000 per unit in smaller scale had hard times selling as they catered to a small group of owner occupiers.

Primary prices¹ continued to tick up to USD 5,337 per sqm land in 3Q20, a 14.7% y-o-y and 3.1% q-o-q. The increase was mainly driven by the entrance of new projects with higher-than-average price and the confidence of developers in large-scale integrated projects. In response to Covid-19, developers were not seen to cut the prices; instead, they gave out more attractive sales schemes, like lengthening the payment schedules, zero-interest rate policies till handover and more valuable gifts. These schemes are expected to continue till the end of the year to encourage sales.

Next quarter, number of units launched are likely to return to the normal range since late 2018, from 300-400 units, bringing in bout 2,500 units for the full 2020 year. This will fall short of supply in 2016-18 period by 40% given the continued legal issues. Such limited supply, together with resilient demand, will keep the price to continue trending upward.

^{Note:
[1] Prices exclude VAT and sinking fund.
[2] Official launch figures. Projects are considered as officially launched when the Sale Purchase Agreements are signed, typically upon foundation completion.
[3] Sale rate is end-of-period figure.
Source: JLL Research}