High-end segment to continue driving HCM City apartment market, affordable units scarce

Apartment buildings in the new Thu Duc City. The luxury and mid-priced apartment segments will continue to lead the market in 2022, while affordable apartments will remain scarce. - VNA/VNS Photo Tran Xuan Tinh

According to the company’s report on the housing market in HCM City and surrounding provinces in 2021, there were 41 apartment projects with about 21,138 units, mostly in HCM City and Binh Duong Province, entering the market.

They sold 17,122 units.

In HCM City, supply and demand decreased sharply from 2020 and fell to the lowest levels since 2015.

Luxury apartments in the city reached new price levels of nearly VND400 million (US$17,555) per square metre.

According to another real estate service provider Cushman & Wakefield, 25,000-30,000 new apartments are expected to enter the market in HCM City this year, mostly in the luxury and high-end segments.

The supply would mostly be in the new Thu Duc City, and online sales channels would remain popular.

The average selling price of luxury and high-end apartments topped VND143.6 million (US$6,266) per square metre in the fourth quarter of 2021, up 23 per cent year-on-year.

Mid-range apartments cost VND56.7 million ($2,474) and affordable units cost VND40.9 million ($1,785), up 15 per cent and 26 per cent year-on-year.

The total number of new and old apartments sold last quarter was nearly 3,000, with mid-range apartments accounting for 82 per cent and high-end ones for 11 per cent, according to Cushman & Wakefield.

No new affordable project was sold.

High-end apartments are those in prime locations and costing above $3,000, mid-range apartments are in convenient locations and cost $1,800 – 3,000, and the affordable segment sells at below $1,800.

Prices to drop after developer pulls out of expensive land deal

Following property developer Tan Hoang Minh Group’s decision to pull out of a deal to buy a 10,060sq.m land lot in the Thu Thiem new urban area at VND2.45 billion ($108,000) per square metre, some analysts expect the market to cool down.

In December the Viet Star Real Estate Investment Co., Ltd, a subsidiary of Tan Hoang Minh won a bid to buy land lot 3-12 for VND24.5 trillion ($1.07 billion) beating off CapitaLand One Financial, a foreign developer.

It was the highest ever paid for a square metre of land anywhere in the country and 8.3 times the reserve price.

Economist Dr Dinh The Hien said the cancellation of the contract would cool the market down, disappointing many small investors who had expected prices to track the “shockingly high” price.

Prof Dr Dinh Trong Thinh, also an economist, said prices in the Thu Thiem new urban area would subside.

Dr Vu Dinh Anh, another economist, said the increase in land prices following the auction last month did not reflect the market.

Speculators pushed up prices by using dubious information and transactions like this one, he said.

Than Thanh Vu, permanent vice president and general secretary of the Vietnam Tourism Real Estate Association, said: “The fact is that the market is still frozen with few or no transactions. The Tan Hoang Minh incident would make the situation worse.

“A freezing market is dangerous.”