Southern condo supply to bounce back from 2022 onwards

The luxury segment likely continues to be more excited in 2022F buoyed by the launches of projects having sought-after locations in District 1 and Thu Duc City.

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HCMC’s condo supply likely to bottom out 

VNDirect expected HCMC's new condo supply to bottom out in 2021F and recover strongly by 60-70% in 2022-23F, on the back of loosening regulatory measures such as Decree 148/2020 and Amended Construction Law 2020. 

According to CBRE, the HCMC new condo supply will recover by 69.5% YoY in 2022F to c.22,000 units and 55.7% YoY to c.34,000 units in 2023F, of which the mid-end segment bounces with a 30-50% contribution of total condo supply. 

“We believe the suburb housing market in HCMC namely Binh Chanh, Can Gio, Nha Be, Thu Duc will be in the spotlight in 2022F, driven by the infrastructure development in these areas”, VNDirect said.

Opportunities for HCMC’s neighboring provinces 

VNDirect remained optimistic in the 2022F outlook for the housing market in HCMC’s neighboring provinces, which it expects to experience both demand volume and price expansion. After the work-from-home experience during the pandemic, it believes homebuyers can prefer larger-sized landed homes to meet ‘work live-play ecosystem demand. In the context of strong price escalation along with limit ed supply in HCMC since 2018 and acceleration in infrastructure development shortening the time to HCMC, it sees opportunities for HCMC’s neighboring provinces such as Long An and Dong Nai.

“The developers that own massive landbank in those areas such as NLG, NVL with mega township projects namely Izumi City, Southgate, Aqua City will take advantage the most. We expect the launches of these projects in 4Q21- 2022F will draw investors’ attention and achieve a high take-up rate thanks to their sought-after location, legal transparency, and quality products”, VNDirect forecasted

Strong housing demand leading to robust prices growth 

There could be no announcements of discounts in HCMC housing primary prices in 2022F to factor in the increase in development cost with higher compensation cost and financing cost due to pending in the past three years and material expense escalation. “We expect developers will offer better handover conditions, better facilities, and supporting payment terms to stimulate demand rather than decrease their primary prices”, VNDirect stressed.

Following these points, VNDirect expected condo primary prices in HCMC would continue to increase in all segments at 1-7% YoY. It projected mid-end segment would increase the most at 7% YoY fuelled by its strong demand and limit ed supply. The luxury segment likely continues to be more excited in 2022F buoyed by the launches of projects having sought-after locations in District 1 and Thu Duc City, after a new pricing level of US$16,500-18,000 psm set by a new branded residence project in District 1 in 2021.

Besides, landed prices of the suburb in HCMC could continue to rise impressively in 2022F on the expansion of expressway to the west and coastal areas in the south with imminent infrastructure projects such as Ben Luc – Long Thanh, Dau Giay – Phan Thiet, Long Thanh international airport phase 1. The proposal on establishment of Northwest City consisting of Cu Chi and Hoc Mon coupled with process planning for urbanizing Cu Chi, Hoc Mon, Binh Chanh, Nha Be, Can Gio into urban districts should boost land prices in these areas as well.