High-end segment to continue driving HCM City apartment market, affordable units scarce

Apartment buildings in the new Thủ Đức City. The luxury and mid-priced apartment segments will continue to lead the market in 2022, while affordable apartments will remain scarce. VNA/VnExpress News Photo Trần Xuân Tình

HCM CITY — The luxury and mid-priced apartment segments will continue to lead the market in 2022, while affordable apartments will remain scarce, according to property consultant DKRA Vietnam Joint Stock Company.

According to the company’s report on the housing market in HCM City and surrounding provinces in 2021, there were 41 apartment projects with about 21,138 units, mostly in HCM City and Bình Dương Province, entering the market.

They sold 17,122 units. 

In HCM City, supply and demand decreased sharply from 2020 and fell to the lowest levels since 2015.

Luxury apartments in the city reached new price levels of nearly VNĐ400 million (US$17,555) per square metre.

According to another real estate service provider Cushman & Wakefield, 25,000-30,000 new apartments are expected to enter the market in HCM City this year, mostly in the luxury and high-end segments.

The supply would mostly be in the new Thủ Đức City, and online sales channels would remain popular.

The average selling price of luxury and high-end apartments topped VNĐ143.6 million (US$6,266) per square metre in the fourth quarter of 2021, up 23 per cent year-on-year. 

Mid-range apartments cost VNĐ56.7 million ($2,474) and affordable units cost VNĐ40.9 million ($1,785), up 15 per cent and 26 per cent year-on-year. 

The total number of new and old apartments sold last quarter was nearly 3,000, with mid-range apartments accounting for 82 per cent and high-end ones for 11 per cent, according to Cushman & Wakefield.

No new affordable project was sold.

High-end apartments are those in prime locations and costing above $3,000, mid-range apartments are in convenient locations and cost $1,800 – 3,000, and the affordable segment sells at below $1,800.

Prices to drop after developer pulls out of expensive land deal 

Following property developer Tân Hoàng Minh Group’s decision to pull out of a deal to buy a 10,060sq.m land lot in the Thủ Thiêm new urban area at VNĐ2.45 billion ($108,000) per square metre, some analysts expect the market to cool down.

In December the Việt Star Real Estate Investment Co., Ltd, a subsidiary of Tân Hoàng Minh won a bid to buy land lot 3-12 for VNĐ24.5 trillion ($1.07 billion) beating off CapitaLand One Financial, a foreign developer.

It was the highest ever paid for a square metre of land anywhere in the country and 8.3 times the reserve price.

Economist Dr Đinh Thế Hiển said the cancellation of the contract would cool the market down, disappointing many small investors who had expected prices to track the “shockingly high” price.

Prof Dr Đinh Trọng Thịnh, also an economist, said prices in the Thủ Thiêm new urban area would subside.

Dr Vũ Đình Ánh, another economist, said the increase in land prices following the auction last month did not reflect the market. 

Speculators pushed up prices by using dubious information and transactions like this one, he said.

Thân Thành Vũ, permanent vice president and general secretary of the Vietnam Tourism Real Estate Association, said: “The fact is that the market is still frozen with few or no transactions. The Tân Hoàng Minh incident would make the situation worse.

“A freezing market is dangerous.” — VnExpress News