Evolving demands being met in high-end segment

Developers from Vietnam’s metropolises are now also targeting markets elsewhere, photo Le Toan

Singaporean developer Keppel Land Vietnam successfully received bookings for all units of the first three towers of its latest project named Celesta Rise in Ho Chi Minh City in one morning event held at the end of November.

The astoundingly quick absorption rate of Celesta Rise proved that the market demand remains strong and developers who have good products can still attract buyers by the droves.

Indeed, Celesta Rise was one of the most sought-after residential developments in the urban Saigon South area thanks to its strategic location as well as unique and fascinating facilities.

Diversifying products and adding technology to serve customers from beginning to end are the way leading developers are now trying to attract customers’ attention.

Andy Han, CEO of SonKim Land, Corporation explained why the company’s luxury integrated development The Metropole Thu Thiem has been a runaway success.

“Vietnamese love buying property. From the central location to ongoing and planned infrastructure improvements, the development was popular from the onset,” he said at a talk held in Ho Chi Minh City last month themed “Real estate and tech sector in a changing world”.

“But what has been really driving sales is The Metropole’s ability to meet the demand of a post-pandemic world: non-touch design and the innovative 99 per cent dust filtering ventilation system. With people spending more time indoors, there is an increased demand for larger apartments of three bedrooms, too.”

In 2020, 65 per cent of apartment units launched in Ho Chi Minh City were in the high-end and luxury segment. Figures from CBRE show that the city’s east along with Thu Duc City have been contributing a major portion of property supply, including high-end and luxury products and is forecast to provide 44 per cent of the total supply until 2025. Meanwhile in Hanoi, nearly 70 per cent of launches were mid- and high-end products.

A primary trend putting wind in the sails of the Vietnamese residential property market is the increasing population and income levels. Local developers are also starting to look beyond the bounds of their northern and southern bases of power, with Ho Chi Minh City-based developers rolling out projects in the capital and vice versa.

According to Nguyen Van Dinh, general secretary of the Vietnam National Real Estate Association (VNREA), even if foreign investment flows into real estate have dropped due to the pandemic, the setback is only temporary as many foreign investors are still waiting for the opportunity to invest in Vietnam.

“The global supply chain has been disrupted and European and North American enterprises are considering leaving China, presenting an opportunity for Vietnam to receive a new wave of foreign investment, which will benefit the real estate sector,” he said.

The positive sentiment is shared by the largest global real estate developers. These investors from South Korea, Singapore, Taiwan, and Japan among others are all looking for assets and cooperation opportunities with reputable domestic enterprises.

However, the forecast recovery will likely be moderated by several factors, such as the prolonged legal difficulties that have been haunting the real estate sector this year.

Despite Vietnam’s strong showing in pandemic control, the coronavirus remains a living threat across the globe and even a working vaccine will take several months of clinical testing before it can be put into wide-scale use.

It is hoped that things can return to normalcy around the second or the third quarter of 2021, with intentional flights reopened, said Dinh from VNREA.

David Jackson - CEO, Colliers Vietnam Vietnam is a good place for investors because the nation’s economy is stable with high demand. Despite the economic recovery, the supply is scarce as investor sentiment was affected by the pandemic. Most projects that went ahead with their launches during the slow down recorded positive transactions. However, the supply of apartments is currently very scarce, while this is the segment targeting the real needs of the majority of customers. The completion of the metro line will give a new look for Ho Chi Minh City’s central area by connecting the commercial centre with the Saigon River and Thu Thiem New Urban Area, and also increases inter-regional connections. Wyeren Yap - General manager south, CapitaLand Vietnam We saw the residential market particularly in the high-end segment of Hanoi and Ho Chi Minh City, where CapitaLand also operates, continue to show steady growth. As an example, the market prices for units at D’Edge Thao Dien continued to rise in 2020. Despite the pandemic, the locals are still posting strong demand for luxury products. With the good economic outlook that Vietnam has been showing after the pandemic, there are still a lot of foreign investors keen to enter, especially in real estate thanks to a steady long-term housing demand, competitive pricing and good yields. Thus, we are optimistic that the real estate market will rebound in 2021. Lim Hua Tiong - CEO, Frasers Property Vietnam Fast economic growth and strong macro precursors, huge investments in infrastructure, and a stable political system, as well as abundant labour at a good cost all speak in favour of Vietnam. In addition, through great efforts from the central government, the current legal system has become more transparent and will continue to be so. At the same time Vietnam’s urbanisation rate increases by 0.5 per cent each year. Currently, foreign investors consider Vietnam an attractive destination mainly due to the effective efforts of both the government and the people in containing the COVID-19 pandemic, promoting business and production activities, and stopping the economic downturn.