Southern property market unusually dull during year-end

In early October, the developer of a high-end apartment project in District 7, Ho Chi Minh City, began accepting bookings for some 100 apartments at a starting price of VND90 million (US$3,750) per square meter.

By early December the booking rate was only 30%, much lower than the company had expected, and so it has not begun sales as planned, a real estate trading floor said.

Weak demand has caused many real estate projects in the city to shelve plans to sell during the year-end.

An apartment project in the city’s Thu Duc City, which first started in 2019, stalled and then restarted in September, had hoped for massive sales in November.

But after three months the project managed to sell only 12 apartments.

A similar project in Thu Duc City stopped sales after finding demand was weaker than expected.

In southern provinces such as Dong Nai, several small real estate projects have begun sales, but bigger ones have put off launch plans due to weak demand or unresolved legal issues.

According to brokers, the developer does not want to begin sales this year-end partly due to low demand.

Vo Hong Thang, director of markets at property consultancy DKRA Vietnam, said in the fourth quarter the southern market has an estimated 1,200-1,600 apartments for sale.

In the first 11 months of the year over 7,000 of the 9,530 apartments on offer HCMC and southern provinces were sold, down 67% and 65% year-on-year.

In November the apartment sales ratio soared to 92% (681 out of 740).

Duong Thuy Dung, executive director of real estate consultancy CBRE Vietnam, said few projects have been selling well despite completing legal procedures, offering considerable discounts and being located in areas with convenient transportation.

According to Ngo Quang Phuc, CEO of real estate firm Phu Dong Group, projects’ development stages are now controlled tightly, especially in terms of legality, causing many with unfinished legal procedures to be suspended.

The fact that many developers are unable to complete their projects on schedule is one reason why customers have lost confidence in the property market, Phuc said.

He predicted supply would not recover until the second half of next year, and the recovery to be gradual.