Downtown condo development ban may cause monopoly
Downtown condo development ban may cause monopoly
The HCMC government’s decision to stop licensing new multistorey apartment building projects in Districts 1 and 3 until 2020 could result in a monopoly among the few investors in projects currently under construction, paving the way for them to raise the prices of apartments, according to the HCMC Real Estate Association (HoREA).
HCMC currently has more than 8,500 high-end apartments, accounting for 30% of the total, while low-cost ones make up only 24.7%, with nearly 7,000 units. This means that there is an imbalance in HCMC’s housing market. A balanced housing market should have the largest proportion of low-end apartments and the smallest proportion of apartments in the high-end segment.
HoREA forecast a shortage of homes for low-income people but an abundant supply of high-end apartments. Investors in luxury apartments will have to compete fiercely for buyers.
However, investors in high-end condo developments in the city center will benefit from the city government’s ban on new apartment building projects in the area, as oversupply in this segment will be addressed in the coming time. Therefore, HoREA proposed the city government continue to license those projects with sound solutions to traffic congestion, flooding and infrastructure overloads.
In addition, the city’s decision has raised concern among local residents who plan to buy apartments, as the ban will likely trigger an apartment price surge. Since late last year, some apartment buildings in downtown HCMC have been put up for sale at higher prices.
Apartments of the Alpha City project on Cong Quynh Street in District 1, for example, are sold at VND220 million per square meter, setting the price for an apartment at some VND11-44 billion.
Similarly, apartments of the Alphaking Ba Son project in District 1 are priced at US$9,000-US$13,000, or some VND200-290 million, per square meter.
