Difficulties gradually on the wane in real estate sector

New supply in some areas is expected to quadruple compared to last year, photo Le Toan

CapitaLand Development (CLD) the real estate development arm of Singapore’s CapitaLand Group, last week kicked-off two of its largest-ever housing projects.

With an estimated investment capital of approximately S$1.12 billion ($796.9 million), Sycamore plans to build CapitaLand’s first large-scale residential project in Vietnam with more than 460 low-rise villas and about 3,300 apartments, with a total construction area of about 593,000 square metres.

Also last week, CLD started construction of its Lumi Hanoi project. Located on a prime site in the west of Hanoi, Lumi Hanoi has a projected total gross development value of about $760 million and offers about 4,000 units.

Ronald Tay, CEO of CLD Vietnam said, “Vietnam is one of three core markets for CLD, and we hold a long-term view of our business in the country. Despite the uncertainties in the nation’s real estate sector, we remain confident of securing compelling investment opportunities by leveraging our almost three decades of on-the-ground experience and strong financial standing.”

“We are on the lookout for attractive opportunities across various asset classes, with a focus on the residential and commercial sectors over the near term,” Tay added. “Our long-term vision is to become a developer of choice on Vietnam’s sustainable urbanisation journey, contributing to the country’s economic success through quality real estate products and services.”

Vinhomes also last week started construction on The Opus One apartment complex in Vinhomes Grand Park Urban Area, located in Thu Duc of Ho Chi Minh City.

The project provides four buildings of more than 2,000 apartments to the market with a total capital of more than $154 million. The project is expected to open for sale in Q2 and be completed in 2026.

In Binh Duong province, Phat Dat Real Estate Development JSC in February started construction of Thuan An 1, only three weeks after being licensed. It is expected to accelerate sales in the first half of this year.

Challenges remain

According to the Vietnam Association of Real Estate Brokers, 2024 will be a year full of opportunities and challenges, with positive moves in supply and demand, especially in the development of affordable and social housing.

Chairman Nguyen Van Dinh said that the participation of investors will help narrow the gap between supply and demand, and make the market more stable.

“From the third quarter of 2024, the market will start to go up, the opportunity to buy houses at the bottom price will no longer exist. Therefore, the first and second quarter of 2024 are considered the last waves for investors to grasp,” Dinh said.

For people with real housing needs, he said that this was an opportunity to buy a house because this period was a time that businesses were forced to restructure and adjust selling prices at the lowest level to survive. “In the context of positive economic growth, real estate prices will certainly increase faster than incomes,” Dinh said.

Meanwhile, Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said the real estate market was moving in a positive direction. “The difficulty is gradually decreasing. Towards the end of the year, more transactions will be reported in different projects. The ability of real estate businesses to withstand and overcome headwinds has also improved. It’s forecast that market growth will return in the second half of 2024,” Chau said.

Real estate expert Tran Khanh Quang added that this was the bottom price level for real estate, and a market for buyers.

“Currently, 20-30 per cent of investors with available cash in their pockets are hunting favourite properties in a good location and good price. These people have investing blood in them and are just waiting for the product to meet their investment needs, and have complete legal requirements before giving a final decision,” Quang said.

Facts and figures

Meanwhile, Savills’ Ho Chi Minh City real estate market report for the fourth quarter of 2023 shows that the apartment segment is experiencing many short-term challenges.

For primary supply in Ho Chi Minh City in 2023, there were only were more than 10,700 units, the lowest number in the past 10 years. In Q4 alone, primary supply was 7,600 units, down 5 per cent on-year. New supply accounts for 37 per cent of primary supply.

A positive point in Savills data is that in 2024, new supply is expected to increase four-fold compared to 2023.

Meanwhile, according to data from Batdongsan.com.vn, the real estate market at the beginning of this year has more positive signs in terms of interest and number of postings from real estate buyers, compared to a year previously.

Data from this unit shows that the demand for searching for real estate for sale nationwide in January increased by two-thirds, and the number of real estate listings also increased by just over half compared to the same period in 2023.

The number of real estate searches nationwide started to increase from the second day of Lunar New Year and kept increasing strongly. By the 10th day of Lunar New Year, it reached an increase of 124 per cent compared to the week before.

Dinh Minh Tuan, director of Batdongsan.com.vn in the southern region, said that land plots outside and inside projects were the most sought after by buyers.

“Specifically, in January, the number of searches for land in Hanoi increased by 110 per cent, and project land increased by 77 per cent compared to the same period last year,” Tuan said. “Meanwhile, the number of searches for apartments in Hanoi increased by 71 per cent. Similarly, in Ho Chi Minh City, search demand increased from 71 to 73 per cent for land plots while apartments had an increase of 59 per cent only.”

Nguyen Nhat Truong, director Marketing and Customer Services, Seaholdings This will be the year to lay the foundation for a new development cycle of the real estate market. However, we still cannot expect a big push at this time because the market has to gradually strengthen its confidence and solid foundation, creating momentum for a new cycle. At that time, affordable housing will be the first real estate segment to enter the recovery phase because demand in this segment is always be high. Seaholdings will continue to launch products that meet legal, aesthetic, and quality standards as well as financial solutions to increase our capability to meet buyer’s real demand. Dinh Nhat Hanh, general director Khai Hoan Land Group The real estate market has passed the most difficult period. This is a good sign for the market to recover strongly from 2024 forward. Khai Hoan Land also aims to recruit 10,000 land investment specialists to supplement and rebuild its powerful sale team. In 2024, we will develop and distribute 10 key projects nationwide. To achieve business goals, strengthening the sales force is understandable. However, reaching 10,000 sales staff will be no easy task. Initially, when setting this number, we were somewhat apprehensive because the current difficulties of the real estate market were not good conditions to entice staff. But Khai Hoan Land has many competitive advantages to complete this recruitment goal, and we are determined to reach this target.

Fresh land law will offer beneficial economic utility The adoption of the revised Land Law in January was billed as one of the most important legislative tasks of the latest National Assembly. It will come into effect in January 2025 and should be viewed as a strengthening of the foundation underpinning the Real Estate Business Law and the Housing Law, both passed last November.

Sentiment robust from foreign real estate investors Business seems to be picking up favourably in Vietnam’s real estate arena.

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