Ho Chi Minh City recorded average apartment prices ranging from 40-60 million VND/m2 in suburban districts and up to 100 million VND/m2 in central areas, beyond the affordability of many middle-income families.
Where is the focus of real estate development in Ho Chi Minh City?
Information at the Workshop "Cash flow into Southern real estate: Identifying investment opportunities" organized by Vietnam Real Estate Electronic Magazine (Reatimes), Vietnam Real Estate Research Institute (VIRES) in collaboration with Vietnam Real Estate Brokers Association (VARS) and Bcons Group, Associate Professor. Dr. Tran Kim Chung, former Deputy Director of the Central Institute for Economic Management Research (Ministry of Planning and Investment) said that the developments in segments and land plots in the market of Ho Chi Minh City and surrounding areas in the first 8 months of 2024 recorded 14 projects opened for sale, supplying 787 products to the market, down 46% compared to the same period in 2023.
The absorption rate of new supply reached about 30%, equivalent to 237 successfully traded products, down 58% compared to the same period in 2023.
The townhouse - villa segment in August 2024 in Ho Chi Minh City and surrounding areas recorded 16 projects opening for sale, supplying 1,333 products to the market, recording a 2-fold increase compared to the same period in 2023. The consumption rate on new supply reached 61%, equivalent to 817 products successfully traded, an increase of 3.5 times compared to the same period in 2023.
In the apartment segment, new supply launched to the market reached 5,378 units, down 24% year-on-year, mostly from the next phase of projects, mainly in Ho Chi Minh City and Binh Duong. The absorption rate reached 76% of the new supply launched to the market, with 4,086 successful transactions, down 22% year-on-year.
For resort real estate, secondary selling prices have dropped sharply, many investors accept losses of 20%, even 30%, but it is still very difficult to liquidate.
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| Overview of the Workshop "Cash flow into Southern real estate: Identifying investment opportunities". |
Regarding the cash flow into the real estate market in Ho Chi Minh City, according to statistics, outstanding real estate credit in Ho Chi Minh City continues to maintain a growth rate, with each month being higher than the previous month. By the end of July 2024, the total outstanding real estate credit in the area reached over 1 million billion VND, accounting for 27.6% of the total outstanding credit and increasing by 5.5% compared to the end of 2023, higher than the general growth rate of credit in the area.
According to Mr. Chung, the focus of developing the real estate market in the Ho Chi Minh City area will include the inner city districts and the capital cities of Binh Duong, Dong Nai, and Long An provinces. Secondly, the axis connecting Ho Chi Minh City with the capital cities of Binh Duong, Dong Nai, and Long An provinces with Ho Chi Minh City as the center will open up and promote the development of urban areas connecting with Binh Duong, Bien Hoa, and Tan An.
Third, the urbanization of Ho Chi Minh City and the capital cities of Binh Duong, Dong Nai, and Long An will promote and expand real estate development to the outskirts of Ho Chi Minh City, the outskirts of Tan An, Binh Duong New City, and the outskirts of Bien Hoa City.
Fourth, new urban areas in the Ho Chi Minh City area, such as Nhon Trach city, Binh Duong new city, Long Thanh airport urban area, etc., will increasingly grow in area, their value will increase, and the complexity of urban areas will become increasingly evident.
Fifth are TOD cities (Transit Oriented Development - defined as an urban development model with public transport as the center) in Ho Chi Minh City, Binh Duong, Long An, Tay Ninh, Ba Ria - Vung Tau. Ho Chi Minh City area concentrates many large-scale national infrastructure projects, which will inevitably create opportunities for TOD urban development in particular and the real estate market in general.
The sixth is the new Thu Duc - Long Thanh - Bien Hoa - Binh Duong urban quadrangle. This is a potential urban development area, a unique feature of the Ho Chi Minh City region until 2030, with a vision to 2045. With full advantages in terms of land, infrastructure, and economic support, this is a unique area for the economic development of the Ho Chi Minh City region in general, urban development in particular, and especially the development of the real estate market.
Real estate prices beyond affordability, demand exceeds supply
Mr. Le Nhu Thach, Chairman of the Board of Directors of Bcons Group, assessed that in Ho Chi Minh City, the average apartment price ranges from 40-60 million VND/m2 in suburban districts and up to 100 million VND/m2 in central areas, exceeding the affordability of many middle-income families. Currently, the demand for housing in Ho Chi Minh City is very high, estimated at about 50,000 apartments per year to meet the needs of the people. However, the supply cannot keep up with this demand due to many factors. Among them, legal barriers, increasing land costs and a shortage of affordable apartment supply are the main reasons why the market cannot develop synchronously.
In fact, about 60-70% of current housing demand is in the low-cost segment. This shows that people, especially those with low and middle incomes, are in dire need of housing solutions that suit their financial capabilities. However, the market is lacking affordable housing projects, making it difficult for many people to find a place to live.
In particular, the issue of customer trust is very important. Many projects have been handed over but the certificates have not been delivered to customers, causing customers to worry and it is necessary to restore customer trust.
According to Mr. Thach, in large cities in the Southeast such as Ho Chi Minh City, Binh Duong and Dong Nai, the demand for housing for low- and middle-income groups, including workers and migrant workers, is becoming increasingly urgent. However, the supply of social housing and affordable housing is still very limited, not meeting the actual needs of this group. This situation forces many people to live in cramped, low-quality boarding houses lacking basic amenities, affecting their quality of life as well as their health.
“The demand for apartments priced under VND2 billion in Ho Chi Minh City is increasing, however, the reality shows that the supply of new apartments in 2024 is extremely limited, pushing up prices, making it difficult for many people to find a suitable place to live,” Mr. Thach shared.
Source: https://baodautu.vn/batdongsan/tphcm-khat-can-ho-duoi-2-ty-dong-d228833.html
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