Carina fire incident led to sharp decrease in newly launched condominium units

Especially, mid-end segment witnessed the biggest decrease in the new launch, dropping by 62 per cent from the previous quarter and 52 per cent from the same period of last year.

According to CBRE, this situation is probably because the fire incident at the end of March has put a stronger focus on safety measures in condominium projects and made the process of obtaining the relevant safety certificates more stringent.

Besides, the government has also limited bank credit going into real estate in order to control the overheating of the market. As a result, developers are expected to look for other sources of funding besides bank loans. 

Some real estate developers have shown an intention to list on Ho Chi Minh City Stock Exchange such as Vinhomes, Van Phu Invest, and Cenland, or have turned to overseas exchanges such as the convertible bond issuance of Novaland on Singapore Exchange.

With regards to the breakdown by segment, the high-end segment accounts for the highest proportion of newly launched units last quarter at 54 per cent, followed by mid-end at 42 per cent. The second quarter of this year recorded one new luxury launch which is Cove Residence Tower of Empire City project with 40 units.

Sales momentum continued to be positive last quarter with more than 80 per cent of new launch units having been absorbed despite the reduction in the number of units sold. Last quarter, there were 6,947 sold units in total, a decrease of 25 per cent from the first quarter of this year and 29 per cent compared to the same period of last year. 

Average price on the primary market was recorded at $1,580 per square meter in the second quarter of this year, three per cent higher than the previous quarter due to increase in prices of the luxury segment. Primary price increases of three to five per cent were observed in some districts such as district 4, Binh Tan and Tan Phu.

Even with a slow start, the mid-end segment is expected to maintain a high proportion in the new launch units of 2018, thanks to some large-scale projects that are expected to launch in the second half of the year. On the other hand, busy pre-sale activities in some luxury projects in the past six months show that the market still has considerable interest in this segment. 

In terms of area, the East and the South will continue to be hotspots for the second half of 2018, especially the Thu Thiem area. Sales momentum will continue to be upbeat; however, developers should focus more on handover quality, facilities, and management quality in order to gain customers’ trust and differentiate themselves from the competition.