According to the Ho Chi Minh City real estate market report for the third quarter of 2023 by Savills Vietnam, the townhouse and villa market in Ho Chi Minh City continues to face a shortage of new supply. This has led to the primary supply in the market for this segment falling to its lowest level in the past 10 years, with only 766 units, down 24% compared to the previous quarter and down 5% compared to the same period last year.
Of which, units valued at over VND30 billion accounted for 78% of the supply and were mainly concentrated in Thu Duc City. Meanwhile, only 13% of the supply from investors in Ho Chi Minh City was priced at under VND10 billion/unit. The number of townhouses and villas successfully traded in the third quarter was only 64 units, mainly from a project in Thu Duc City. The absorption rate of townhouses and villas reached 8%, down 36% compared to the same period last year. This is considered the lowest level recorded since 2018.
Savills Vietnam said that in the current difficult real estate market, investors continue to be cautious and even suspend sales, limit marketing and delay the launch of new projects until next year. Four projects that were on sale last quarter have temporarily suspended sales this quarter to complete legal procedures, wait for the market to recover and wait for the completion of surrounding infrastructure projects. Meanwhile, at existing projects, some investors continue to apply diverse sales and lending policies, and rental commitment policies to attract buyers.
Regarding the supply of townhouses and villas in Ho Chi Minh City, the latest data from Cushman & Wakefield shows that the supply of townhouses and villas from now until the end of 2024 will continue to be scarce. In Ho Chi Minh City, in addition to the project in the East of Ho Chi Minh City (located in a large-scale urban area) that has just been launched to the market, in the West of Ho Chi Minh City, there is only one project that is a "rare" supply of townhouses to the market at the end of this year.
Ms. Trang Bui - General Director of Cushman & Wakefield Vietnam said that with the infrastructure system and convenient traffic routes connecting the center of Ho Chi Minh City, the demand for townhouses and villas has gradually improved. However, legal problems and project approval procedures are still common issues affecting the new supply of the real estate market in general, and townhouses and villas in particular.
Sharing the same view, Mr. Neil MacGregor - General Director of Savills Vietnam assessed that the townhouse and villa segment will maintain its growth potential despite current challenges. The development of infrastructure creates conditions for investors to access more land funds to solve the current shortage of supply.
Meanwhile, the Vietnam Real Estate Research Institute believes that the townhouse and villa segment is unlikely to have a breakthrough in the short term, although demand is forecast to be more vibrant with a clearer recovery of the economy in the coming time. The market will be selective, projects developed by large, reputable investors who have built an ecosystem, good infrastructure, convenient locations, complete legal documents... will be favored and have positive transaction volume in the period 2024-2026.
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