HCM City apartment market shows signs of coming out of slump: experts

A residential project in District 7, HCM City. The city’s condominium market is showing the first signs of recovery. — VNS Photo Thu Ngân

HCM CITY — The HCM City condominium market is stirring again after a long stupor, experts have said.

In a recent report property consultancy CBRE Vietnam said around 3,600 new units entered the market in the third quarter, or nearly 90 per cent of the supply in the first half, up 27 per cent year-on-year. 

The supply all came from continuing phases of existing projects.

Some 60 per cent of new supply in the first nine months of 2023 came from just one township project in the East, as the region remained the key area for condos.

Around 96 per cent was in the high-end segment and the remaining 4 per cent in the luxury segment, CBRE said.

"Although there is still a big gap between supply and absorption compared to previous years, the market showed positive signals,” Dương Thuỳ Dung, executive director of CBRE, said. 

She said liquidity has improved from the first half of this year. 

“It can't be denied that demand is certainly there, and buyers with sufficient financial capacity are still willing to invest the market, and proper pricing is the key decision-making factor," Dung said.  

Buyers now have easier access to bank mortgages as many lenders have cut interest rates in the third quarter. 

M&A and investments by funds are helping developers find a way out of their earlier cash crunch. 

Singaporean developer CapitaLand recently sold its new project, De La Sol in District 4.

To be handed over next month, it has 870 one- to three-bedroom apartments and penthouses ranging in size from 60sq.m to 197sq.m.

More than 90 per cent of the units the company put on sale were snapped up. 

Speaking to Việt Nam News, Wyeren Yap, the company’s general manager for the south, said the condo market in the city is seeing low supply and high demand, and so several projects have been sold out despite the high bank mortgage interest rates of around 10 per cent, which the government has been trying to lower to 8-8.5 per cent. 

“This shows there is still a strong demand for housing in the city, especially from investors who see real estate as a long-term and stable investment option compared to the stock market.”

Customers are also becoming more selective when choosing a project, he said.

“They pay more attention to the location, quality and reputation of the developer. Therefore, only the projects that meet these criteria can attract customers and achieve high sales.”

The market situation means prices are likely to rise, and so buying now could be a good investment opportunity, he said.

Future predication

Analysts are unanimous the market will recover sooner rather than later.

“I think the market will improve next year, as the Government is taking various measures to stimulate the economy, such as lowering interest rates and providing support for both end-users and businesses,” Yap said.

“These policies will boost the confidence and demand of consumers and investors in the real estate sector. 

“Our outlook is still very optimistic. I expect the market to pick up again after the Tết holiday, which is a traditional time for people to save and spend money.

“Especially those who have extra income will look for investment opportunities during this period, and real estate is one of the most attractive options.”

According to CBRE, in the last three months of 2023 more than 3,000 condominiums and 85 landed properties are set to be launched in HCM City. 

“The market will face headwinds at least until the first half of 2024, and transactions will be stronger when the city's macroeconomics, legality and buyer sentiments improve," Dương said.