Summary

Residential real estate in Vietnam is expected to grow at CAGR of more than 15 percent in the forecast period.

Vietnam is emerging as a thriving and fast-growing real estate market in Southeast Asia. It is now widely seen as the luxury real estate market hotspot, with a growing economy, coupled with laws that have made it easier for foreigners to purchase the property. In 2018, the Vietnamese economy grew by a robust 7.1%, after expansions of 6.8% in 2017 and 6.2% in 2016. Vietnam is expected to continue its stellar growth in the coming years.

The outlook for the Vietnamese residential real estate market is positive mainly due to continued strong economic growth, rapid urbanization growth and the construction of several mega projects in major cities.

Vietnam has introduced major policy changes and issued new laws, namely Housing Law and Law on Real Estate Business (Introduced in 2015), Law on Sell and Transfer of Real Properties. These laws made it easier for foreigners to buy property as, Foreigners can buy property by simply having a tourist visa, there’s no cap to the number of properties you can buy (previously you could only buy one property). Foreigners are still restricted to buying a maximum of 30% of the units in condominiums and cannot own more than 10% of the properties in a landed project.

In 2019, new villa developments including Athena Fulland by Vimedimex, Sunshine Wonderland by Sunshine Group and Vincity Sportia by Vingroup are expected to enter the market. The total stock of rental apartments in HCMC was over 5,700 units in 2018, up 20% from 2017, the highest growth in five years.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which came into force in January 2019, is a free trade agreement between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam. The agreement is expected to benefit the residential real estate market in the country.

The CPTPP also enlarges the real estate services in which foreign investors can participate in, including real estate brokerage services, real estate exchange floors, real estate consulting services and real estate management services, with respect to both residential and commercial properties.

This quick surge in individual wealth has made property affordable for many Vietnamese people, contributing to an increase in new developments and an increase in property prices. The residential market focus has now shifted from the high-end to the mid-value segments, as urbanization has created an ongoing demand for housing in large urban centers.

There will be more developments in the residential estate segment for low-income earners in 2020 as most developers have focused on building projects in the medium to prime segment throughout 2018 and 2019.

Key Market Trends

The Condominium Market in Vietnam has Robust growth

Vietnam has high absorption rate of 70-80 percent of new supply and surging demand for residential real estate. There are 30,000 to 40,000 new apartment units available each year. Bigger cities and coastal cities like Ho Chi Minh City, Da Nang, and Hanoi have benefited the most of these changes and the fast development and will continue to do so for years to come.

According to the source, the prices of luxury condominium units in Ho Chi Minh City increased by 17% to an average of USD 5,518 per sq. m. in 2018 from 2017. In HCMC’s city center, the price of a luxury apartment starts at USD 5,000 per sq. m.

At Feliz en Vista, a four-tower luxury condominium development in HCMC’s District 2, condos are currently priced between USD 232 and USD 290 per square foot (sq. ft.). This means that a 1,722 sq. ft. the four-bedroom condo unit is offered from USD 400,000 to USD 500,000. Almost all the units at Feliz en Vista were already sold by end-2018.

At the Grand Manhattan, a 39-story development located in HCMC’s District 1, known as “Saigon’s Wall Street,” selling prices for New York City-inspired condominium units starts at about USD 557 per sq. ft.

Supply of Villas and Townhouses is Rising in Vietnam

Markets in provinces surrounding Ho Chi Minh City, Hanoi, and Danang have subsequently prospered as well. Foreign participation and investment continue to grow due to project co-operation, M&A, and direct financing, while domestic and foreigner buyers have driven interest for Grade A and luxury apartments and spurred new models for real estate development.

In Hanoi, four new projects and 9 new phases supplied almost 2,350 new dwellings in Q4 2018. In 2019, new villa developments including Athena Fulland by Vimedimex, Sunshine Wonderland by Sunshine Group and Vincity Sportia by Vingroup are expected to enter the market.

In HCMC, five new small-scale projects and one new phase of an existing development added about 390 new dwellings in Q4 2018. The primary stock reached over 1,280 dwellings in Q4 2018. From 2019 to 2021, about 22,65o dwellings are expected to enter the HCMC market. Suburban districts, such as District 9, Binh Tan, and Binh Chanh will contribute around 56% of future dwelling supply.

Competitive Landscape

The Vietnamese residential real estate market is fragmented due to the presence of many local and global players in the market. Vietnam residential real estate includes pure Vietnamese capital based local companies, foreign investment funds which are foreign companies and joint ventures firms.

In 2018, Hanoi and HCMC enjoyed a high level of demand from international buyers. The performance of the high-end segment (Grade A) has improved over the last three years, attracting local and foreign investors with competitive pricing and appealing rental yields. The land plot segment is expected to grow the fastest. The second will be mid-end and affordable housing segments. Key players in the residential real estate market are Novaland Group, Dat Xanh Group, FLC Group, Hung Thinh Real Estate Business Investment Corporation, and Nam Long Investment Corporation.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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