Southern property market: Positive signs since 2022 onwards

This company also believed the suburb housing market in HCMC namely Binh Chanh, Can Gio, Nha Be, Thu Duc City would continue to do well in 2H21-2022F, driven by the infrastructure project development in these areas.

Price increase in all segments

According to CBRE, the sales volume of HCMC condo market in 2Q21 strongly rose 143.1% YoY to 4,700 units driven by ample new launches of 3,968 units (141.4% YoY). The mid-end segment still dominated the market with a new supply increase of 246.6% YoY to 3,116 units, accounting for 78.5% of total new supply, mostly from the West and the South. The Take-up rate remained high at 118.4% (0.7% pts YoY).

VNDirect saw new pricing levels in the luxury segment set by the Grand Marina project with a price of US$16,500-18,000 psm, and The MarQ project with a price of US$7,500-9,800 psm, driven by their sought-after locations, leading to an increase of 9.2% YoY in luxury condo segment. The mid-end condo segment price also posted an impressive growth at 8.3% YoY, on the back of a vibrant market regarding infrastructure development in the West and the South of HCMC. The others stayed nearly flat, inched up 0.4-1.6% YoY.

Based on VNDirect’s market research, land prices in Northwest continued to increase impressively in 2Q21, especially Cu Chi (17.8% QoQ), driven by the proposal on establishment of Northwest City comprising Cu Chi and Hoc Mon along with planning for urbanizing Cu Chi, Hoc Mon, Binh Chanh, Nha Be and Can Gio into urban districts. It is noted that land prices in the city center showed signs of going down due to the rental market being hit hard by the absence of foreign and domestic passengers.

Meanwhile, the secondary prices in central business districts (CBD) gone down in 2Q21 such as District 1 (-3.2% QoQ), District 3 (-1.9% QoQ), District 10 (-2.5% QoQ), due to the lack of foreign tenants. Besides, condo prices in HCMC’s suburban areas kept doing well with 0.4-3.2% QoQ. Of which, Go Vap district continued to rise the most at 3.2% QoQ in 2Q21, thanks to its better infrastructure and facilities in recent years.

Spotlights in HCMC’s neighboring provinces

As a result of strong price escalation along with limit ed supply, investors are looking for new opportunities in neighboring provinces to HCMC such as Long An and Dong Nai. In 1H21, the new supply for ready-built houses in Dong Nai contributed the most with 3,700 units, accounting for 67% of that in the Southern market, followed by Long An with 630 units, accounting for 11%, according to DKRA.

This opens opportunities for developers that own massive landbank in those areas such as NLG, NVL with mega township projects namely Waterfront, Southgate, Aqua City. VNDirect believed the launches of these projects in 2H21-2022F would draw investors’ attention and achieve a high take-up rate thanks to their sought-after location, legal transparency, and quality products.

Housing prices of HCMC suburbs to go up 

VNDirect believed there would be no announcements of discounts in HCMC housing primary prices in 2H21-22F due to the increase in development cost with higher compensation cost, financing cost in the past two years, and higher material cost. This company also expected developers would offer better handover conditions, better facilities, and supporting payment terms to stimulate demand rather than decrease their primary prices. 

Condo primary prices in HCMC will continue to increase at a slower pace of 1- 4% YoY in all segments except the luxury segment, in VNDirect’s view. The luxury segment likely continues to be more excited in 2H21-22F 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 1H21. 

Besides, this stock company also forecasted that landed prices of the suburb in HCMC would continue to rise impressively in 2H21F 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.