City property market to change

A corner of Phú Mỹ Hưng urban area in HCM City. - VNA/VNS Photo An Hiếu

In its latest report on the real estate market in the second half of 2017, the association said there would be a switch from high-end projects to mid- and low-end segments to meet demand from people with lower incomes.

The emphasis on the low- to mid-end market segment began early this year, the report said.

Thirty-two new housing projects were approved in the first half of the year with a total of 16,505 apartments. Of these, more than 68 per cent were in the mid- and low-end market.

“This is a good sign because developers are re-structuring their products to develop apartments with one or two bedrooms to meet the huge demand of people with lower incomes,” said Lê Hoàng Châu, chairman of the association.

The association said that in the last half of the year, co-operation among developers would be more common as the development trend continues.

Merger and acquisition activities are also expected to increase as the National Assembly’s resolution to reduce bad debt becomes effective in mid-August.

The market is expected to become more stable and transparent when new policies related to tax, credit, planning and administrative procedures become effective.

The association said that investment flows would come mostly from foreign investors and overseas remittances.

Châu said that in the first half of the year, 20 per cent of US$2.1 billion in overseas remittances was poured into real estate.

Nearly 13 per cent of foreign direct investment (FDI) was invested in the real estate market, equivalent to $50.3 million.

“FDI to the sector in the last six months of the year will surge because many contracts to develop property are under negotiation,” he said.

Châu said that infrastructure upgrades, including metro lines and rapid bus routes, would create advantageous conditions for companies to develop in the mid- and long-term.

Developers are expected to focus on projects friendly to the environment to meet the demand of consumers who want modern technologies, including the internet of things (IoT) and artificial intelligence, he added.

In the first half of this year, the city developed 1.92 million sq metres of housing.

During the period, the city continued to upgrade housing, and targeted rebuilding 50 per cent of 474 old apartment buildings until 2020.

As of the end of last year, the city had 13,220 real estate companies.

In the first half of the year, one-third of 18,000 new companies established in the city were real estate companies, with most of them providing real estate services.