Ho Chi Minh City sees uptick in condo absorption

Jul 13, 2019 | 11:26 AM GMT+7

TheLEADERNew projects achieve high sold rate of over 80 per cent of launched units, despite price increase.

Ho Chi Minh City sees uptick in condo absorption
Apartment projects in the southern hub are selling well.

In the second quarter of 2019, due to slow licensing process since last year, new launch supply continued to drop to the lowest number in the last five years.

There were 4,124 units launched from 10 projects in the second quarter, a decrease of 7 per cent q-o-q and 34 per cent y-o-y, bringing total new supply in six months of Ho Chi Minh City to 8,547 units, according to real estate consulting company CBRE.

Despite of limited new launch events, developer actively organised pre-launch, expo and client events to gauge market interests in the first half of 2019. These events are promising a dynamic second half of 2019.

In the second quarter, there were only two new projects that held their first launching events, which are The Marq in District 1 and The Signial in District 7. The remaining eight projects launched their subsequent phases.

CBRE reports that these new launch projects achieved high sold rate, over 80 per cent of launched units, even though their price increased by 5 per cent to 10 per cent compared to the previous launches.

Demand remains strong in the market which is witnessed through high interest of the market to pre-launch events in the last six months. Booking rates are high in these pre-launch events, especially, some projects received number of booking higher than their launching plan by 50 per cent to 100 per cent.

In terms of segment, mid-end segment accounted for the highest proportion of new launch units at 56 per cent, followed by high-end at 40 per cent. The second quarter recorded one new launch in luxury segment which is The Marq with 180 units and launching price around $7,000 per square metres. There is no new launch supply in the affordable segment.

Sales momentum continued to be positive with more than 80 per cent of new launch units having been absorbed.

During the last three months there were 4,576 sold units, a decrease of 23 per cent q-o-q and decrease of 37 per cent y-o-y.

The reduction in sold units was purely due to a decrease in new launch supply.

Inventory overall in Ho Chi Minh City was absorbed gradually with 2,000 units per year in average for the last three years.

There were only approximately 15,000 units remaining in the primary market, accounting for 5 per cent of the accumulated new launch supply. The remaining units are mainly from old projects with generally inferior quality, ie. large size units, inferior design and unit layout.

Average price on the primary market was recorded at $1,873 per square metre, an increase of 5 per cent q-o-q and 20 per cent y-o-y thanks to the lack of supply and good sale performance in previously launched projects.

Increases in primary price were observed across the market. District 2, District 7 and District 9 recorded highest price escalation of 15-25 per cent y-o-y.

CBRE expects in the last two quarters of 2019, the market is expected to welcome a wave of new launch supply from the East which is led by Vinhomes Grand Parrkin District 9 with over 10,000 units and five new projects in District 2.

Other areas also become more active such as the West with AIO City, Akari City and D-Homme; and the South with subsequent phases of Eco Green Saigon, Sunshine City Saigon and new project called Lovera Vista.

In total, there will be over 23,000 units launched in the second half of 2019.