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The condominium supply in HCMC in the last quarter of 2022. (Photo Courtesy CBRE Vietnam) |
This volume, experts reported, is lower than that of Hanoi and that of any quarter in HCMC in previous years.
A report from CBRE said that within this supply, the high-end segment will continue to dominate with 75 percent. The luxury segment and mid-tier segment, the company reported, shared the same proportion of 12 percent. Most future supply will come from subsequent phases of already launched projects, and only six out of 20 expected projects are first-time sales.
According to CBRE, the eastern area is the main development direction of the city, with over 48 percent of total supply, while the western part of the city is forecasted to be the new highlight, with more than 2,000 units to be launched, most of them in Binh Tan district. Hoc Mon ward is also expected to welcome its first commercial condominium project with a supply of nearly 800 units.
"The first half of 2022 witnessed the recovery of the residential market, and this trend was expected to continue. However, turbulence in the latter half amidst the recovery has affected the recovery speed, as well as market sentiment. CBRE forecasts that difficulties will continue in 2023 with limited supply and low liquidity due to challenging credit accessibility for home buyers. There will be adjustments in the supply with fewer luxury products and the focus will be on high-end and upper mid-end segments. The average primary price will stabilize in 2023-2024,” Duong Thuy Dung, executive director of CBRE Vietnam, said.
“When the market can be back to normal will depend on the speed of the macro-economic policy approval, including credit policy, the revised land law and the legal issues resolving to break the deadlock for new supply," she said.
In the last quarter of 2022, only 1,312 new condominium units were launched in HCMC, the lowest new supply within a quarter over the last ten years except for the two pandemic years, bringing the total launched units in 2022 to 18,440, equal to the number in 2020 but only 70 percent of the pre-Covid19 level in 2019.
The eastern part of the city continued to lead the market with three newly launched projects and the next phase of one existing project, providing over 1,000 units, making up nearly 81 percent of the new supply.
CBRE said that besides the licensing issue in recent years, many developers have intentionally delayed their sales plans due to concern that the economic recession will affect demand.
The high-end segment remained the leading segment, with over 16,850 units, accounting for 90 percent of the total supply within the year. Remarkably, 93 percent of the total supply in 2022 was launched in the first three quarters and 60 percent of it came from different phases of a Vinhomes township in District 9.
All newly launched projects in 2022 were developed by major renowned developers with landbank from previous periods.
Q4 2022 recorded 1,155 sold units, down 85 percent quarter on quarter. The number of units sold is also less than the newly launched units within a quarter for the first time since the pandemic.
The average primary price in Q4 2022 was relatively stable compared to the previous quarter. The luxury segment is the only segment that experienced price growth at 1.4% quarter on quarter, 7.8 percent year on year, while other segments' primary prices stayed at the same level compared to the previous quarter.
However, sales policy showed a major revision in the last quarter of the year when numerous developers offered more vigorous discount rates than usual. The discounts ranged from 20 percent to 45 percent, depending on payment schedules and other promotional schemes. The high discount rates only came from developers under substantial financial pressure, and the projects' legal status is still unclear.
CBRE said average secondary prices started to decrease in Q4, but mainly in projects with many units and a high level of speculation. The price reduction can be up to 20 percent.
“This price decrease reflects the investors' expected profit adjustment but not the "cut loss" of the whole market yet. Investors that did not use financial leverage or have no cash flow pressure are still waiting for a better time to sell their assets,” CBRE suggested.
