Overview HCMC and Hanoi Residential 3Q 2018

Slow down supply in villas/townhouses

Apartments: New supply reached 8,086 units in 3Q18, most of that already had soft launches in 2-3 previous quarters. Limited supply came from projects newly introduced in the market in this quarter. Villas/Townhouses: New launches totalled 814 units, down 47% q-o-q due to the slow down in launching activities during the "ghost" month in 3Q18. 

Demand in tandem with supply 

Apartments: Take-up was 16.4% higher q-o-q, with 8,189 units. The ratio of units sold to new launches averaged around 70% in 3Q18.

Villas/Townhouses: Sales totalled 904 units, in line with the new supply. The demand still at a good level with around 10 units per months for each existing development.

Primary market

Apartments: Generally, prices were stable q-o-q across all segments. A slight decrease in selling price in USD term was due to the VND devaluation recently.

Villas/Townhouses: Prices continued the prevailing uptrend at 0.7% q-o-q, especially among properties priced at around USD 330,000-USD 550,000 per unit.

Secondary market

Apartments: Price growth softened compared to previous quarters, with the slowdown more considerable in luxury apartments.

Villas/Townhouses: Prices were notably higher, with nearly 50% of the total secondary supply seeing price increases by around 2-3% q-o-q.

Outlook

Pipeline supply for 2018 at good level: Total apartments new launches in 2018 may reach the same level as the peak in 2017, but in a more sustainable mode with the expansion of the lower-end segments. Around 840 new Villas/Townhouses are expected to be launched in 4Q18, mostly from the suburbs area.

Good sales rates: Sales rates are expected to remain high, as seen recently, with around 70% and 90% for apartment and villas/townhouses, respectively.

[1]Excludes land plot projects

[2] Excludes planned projects not launched for sale yet. Includes fully sold projects.

[3]The percentage of [2] that remains unsold at quarter-end.

[4] Projects are only considered as officially launched when the Sale Purchase Agreements can be signed upon the completion of foundation.

[5]Q-o-Q and Y-o-Y changes are adjusted to remove effects from supply additions / removals.

HANOI RESIDENTIAL

Strong new launches across the city: Approximately 10,900 units were newly launched in 3Q18, up 34% q-o-q. Nearly 69% of the total came from new projects. Regarding location, five districts recording new supply of more than 1,000 units each included Long Bien, Nam Tu Liem, Ha Dong, Tay Ho and Hai Ba Trung, mostly on Affordable and Mid-end segments.

Demand at good levels: Take-up totalled 10,554 units, 54% of transactions was at a price ranging from USD 800- USD 1,800 per sqm. Strong sales rate, especially new launches project. Affordable segment recorded the highest sales rates for new launches projects, about 71%. Nam Tu Liem, Long Bien and Ha Dong districts led the 3Q18 sales, in tandem with new supply.

Primary market: While most Premium and Luxury projects managed to maintain their prices, the Affordable and Mid-end apartments increased 1.9% thanks to the strong owner-occupied demand. The non-chain-link prices decreased 1.5% q-o-q due to the increasing proportion of lower-than-average units in the quarter's new launches

Secondary market: The chain-linked prices continued to be lower by 0.5% q-o-q. The non-chain-link prices improved, at USD 1,203 per sqm,  thanks to the expanding in the proportion of the new projects with better construction quality and amenities.

Outlook

Large pipeline supply for end-2018, focus on the Mid-end segment: More than 23,000 new units are scheduled to complete in the last quarter of 2018, 43% comes from the Mid-end segment. New supply in 4Q18 expectedly total more than 8,000 units with 80% from the Mid-end segment. Given this, the total launches in 2018 may surpass the 2017's level with more than 35,000 units launched.

Price improves: Primary price likely to inch up by end-2018. The low-priced sectors targeting owner-occupier demand will drive future sales.

[1] Excludes planned projects not launched for sale yet. Includes fully sold projects.

[2] The percentage of [1] that remains unsold at quarter-end.

 [3] Q-o-Q and Y-o-Y changes are adjusted to remove effects from supply additions / removals ("chain-link")