Ho Chi Minh City’s economy in the first three months of 2017 continued to develop steadily with positive conditions enhanced by a combination of improved investment environment, increasing private sector participation and wave of start-up companies. In particular, the gross regional domestic product (GRDP) is estimated to increase by 7.46% (while this figure for the same period last year was 7.08%). Industrial production index (IIP) rose by 6.02%, while total retail sales of goods and services increased by 12%, achieving approximately USD10 billion. The city’s export values and import values were USD2.78 billion and USD3.56 billion respectively. Total newly registered and supplementary FDI achieved USD550.4 million in which there were 137 supplementary projects, worth of USD132.6 million.

Condominium Market Performance 

The review quarter recorded more than approximately 6,000 successful deals, significantly decreasing by 50% compared to the previous quarter. As a result of downsize in new supply, the number of sold units was limited. Mid-end segment dominated the sales with an absorption rate of 71%, equivalent to approximately 4,300 units. On the primary market, sale price continued the rising trend, up 5% q-o-q as newly launch projects offer higher sale price than market average. High-end properties had the strongest price appreciation by 7% q-o-q. 

Condominum Supply

New launches significantly declined by 40% q-o-q with more than 4,000 units. The majority of new supply comes from subsequent launches of existing projects. As developers are putting more emphasis on lower-end products, the mid-end market dominated new launches in the review quarter. While the luxury-segment recorded no new launch, the high-end segment had modest supply, dropping their market share by 65% q-o-q. In terms of location, the east and south of the city continued to be the largest suppliers thanks to its potential growth with ongoing infrastructure development projects and large land availability. 

Condominium Demand

According to Vietnam’s urban development planning to 2025 with a vision to 2050, the country urban population distribution will reach 45% in 2020. As the country embarks on an extensive urban transformation, large cities such as Ho Chi Minh City should be prepared to undergo a burgeoning demand for accommodation from an increasing number of migrants. In recent years, condominium have been one of the most favorable types of urban accommodation and this trend is expected to continue on the back of rising housing demand and consumer’s preference. 

Outlook

With more developers shifting their focus to lower-end market segments and sustainable increase in apartment demand, Colliers expect the market to remain strong in the coming quarters. Price appreciation is forecasted to be on a moderate rate of 5%-10% depending on location and quality of projects. Buyers are becoming wiser in their buying decisions and have higher requirements for finishing quality, supporting facilities and amenities as well as surrounding environment.

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