Exceptional demand for luxury flats
Exceptional demand for luxury flats
With robust economic growth in Vietnam over the past several years, foreigners, especially those from Hong Kong, Taiwan, and mainland China, are driving investment into the real estate market, targeting projects in the heart of Hanoi and Ho Chi Minh City.
Dung Duong, senior director at CBRE Vietnam shared that luxury apartments with the price of more than $7,000 per square metre have been very attractive among customers.
“These projects are all located at the heart of Ho Chi Minh City and Hanoi where the land fund for property development is limited and not many plots are left un-developed,” Dung said.
The luxury segment has seen limited supply since there were no new projects launched in the third quarter of 2018. Several luxury projects were sold out in a short time after launch. Some projects registered four times as many offers as the units the developer put on sale, Dung said.
“To our expectations, luxury apartments will continue to see sales above 50 per cent. The limited land fund in the heart of Ho Chi Minh City is one of the major reasons for the attractiveness of segment,” Dung said.
Alpha King, a newly arrived foreign investor, is going to open Alpha City for sale. The luxury project, located in District 1 of Ho Chi Minh City, offers prices ranging from $8,000 to $9,500 per sq.m.
As Jimmy Chan, CEO of Alpha King, the investor wanted to create a landmark project honouring the rich Vietnamese culture in harmony with modern technologies and global standards.
“Thus, our projects are a true tribute to the antique beauty of Saigon by providing the most arty and characteristic space, which can improve the living, working, and entertaining values of Ho Chi Minh City’s dwellers,” Chan said.
According to Savills Vietnam, since the law was changed to allow foreign ownership, foreigners have been buying into the Vietnam story, taking advantage of bargain prices compared to the rest of Asia, and are rapidly deploying capital for investments in the region.
Apart from foreign investors, luxury projects also caught the eyes of wealthy domestic people.
The recent Wealth Report by independent UK real estate consultancy Knight Frank shows that the number of ultra-high net worth individuals (UHNWI) in Vietnam grew by 320 per cent between 2000 and 2016, the highest rate of increase in the world, followed by India and China. This figure is expected to keep increasing by 170 per cent from 2016 to 2020, also the fastest growth rate in the world during this period.
Within the luxury segment, there is tremendous upside and opportunity for long-term investment and great potential for capital appreciation as Vietnam is poised to continue its growth.
In other words, although there is still a long way to go for the Vietnamese property market to catch up to Hong Kong and Singapore, it is well on its way to becoming Asia’s next tiger with strong economic growth, a growing middle class, and relatively affordable pricing.
Savills also estimated that in the next three to five years, the demand for luxury apartments will exceed the supply, especially for projects located in Ho Chi Minh City’s districts 1, 2, and 3 that feature perfect access to the city centre, face the Saigon River, and are located near the metro line which is slated to start operation after 2020.
