The CBRE report claims that on the back of improved economic fundamentals, Vietnam’s gold, oil and stock prices picked up and its real estate market remained buoyant despite instability in international economies. Leasing activities continued to be active. Rents growth and occupancy levels witnessed sustained improvements across all property types. Vietnam’s condominium sector continued the strong momentum seen in 2015 and reported positive figures in 2016, although there have been growing concerns about oversupply. The gravitation of big-name developers towards the lower-end segments is expected to hold up market sentiment and bring balance to this sector.

 
For property investment, the residential sector will continue to attract developers and investors as fundamentals still look positive. However, income producing assets, especially Offices and Hotels will draw particular attention, following several high-profile transactions in 2016.

Condominuim Sector

According to the World Bank, with the current trend of urban migration in Vietnam, the share of the population living in urban centres is forecast to be near 50 percent by 2040, with approximately 374,000 additional units needed in cities every year to meet demand. With such rising housing demand, the condominium market in Vietnam has been on an upward trend in recent years, with more newly launched supply, generally good sales performance and increases in primary selling prices across all segments. This has raised growing concerns about the market becoming unsustainable, especially in the higher end segments. 

The fact that some well-known developers have expressed interest in focusing more on the affordable segment is expected to resolve the supply-demand sustainability problem to some extent. The government is also considering more regulation of the market to make it more resilient against the uncertainties of macro factors. 

As high-rise condominiums are gradually becoming more visible over the skyline of Vietnam’s two biggest cities, new clusters of urban communities are taking shape. The land space freed up from this vertical urbanism will hopefully be used to make Vietnam’s cities more liveable.

Download the full report here via the CBRE Vietnam website