City pushes ahead with key ventures
City pushes ahead with key ventures
Despite the serious impacts of the ongoing global health crisis, Ho Chi Minh City’s real estate market has seen outstanding breakthroughs for a range of projects resumed after long delays.
Buildings in Ho Chi Minh City (Source: VNA)
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Ho Chi Minh City Department for Construction recently issued permission for three projects to sell their apartment units after passing enough conditions to provide to the market.
One of the three projects is Block H of Binh Chieu Residential Area in Thu Duc district with 214 units, invested in by Thu Duc House Development JSC.
Another example is Phu My Hung Development Corporation’s project that was approved to sell 193 units out of the total 242 units located in District 7.
At the end of March, some projects were announced to be launched in April. As such, Hung Thinh Corporation is going to introduce a new project located next to Thu Duc district. This project will offer more than 3,000 units to the market.
Meanwhile, other developers such as Van Phuc Group and Kien A Corporation are waiting for the time after the pandemic to launch their projects.
Furthermore, Ho Chi Minh City Department of Planning and Investment currently has a list of 46 projects which are considered to be pipelined, with many of those belonging to large-scale and foreign developers. Among those, Phu My Hung Development Corporation proposed to solve the land clearance and compensation in some of the precincts of its project. Meanwhile, Novaland requested to continue its 30-hectare project in District 2.
Hanwha Life Insurance also submitted a proposal to the city to acquire the SJC Building in District 1 while Sun Wah Properties has asked for permission to set up a pre-feasibility study for Hoa Lu Underground Car Park.
Meanwhile, the Singaporean developer Mapletree wants to participate in land auctions for the multifunctional complex in District 5 and District 1.
According to Eric Solberg, chairman and CEO of EXS Capital Group, foreign investors still remain positive when it comes to the prospects for high-end residences.
Over the past few years, EXS Capital Group invested around $200 million together with SonKim Land to build up a luxury real estate development in Ho Chi Minh City. More than half of the units of the group’s latest project named Metropole Thu Thiem located in District 2 have already been sold, with development and construction proceeding well.
“This project will be fine, even if sales are a bit slower this year. Obviously, the large, fun sales events for which SonKim Land is well known are currently postponed due to the social distancing measures. However, as soon as the pandemic has passed, I am sure the demand for these very high-quality units as well as most other forms of real estate will come back,” Solberg told VIR.
Meanwhile, Inoue Yoshitaka, business development manager of Creed Group, a Japanese real estate investment group with a primary focus on the Southeast and South Asian real estate markets, told VIR that Vietnam is very attractive to foreign investors, especially those from Japan. “Ho Chi Minh City’s population is growing by 3 per cent per year and the supply is not keeping up. I believe the real estate market will continue to grow due to the strong demand. Therefore, we think it is still a very attractive market for overseas investors. However, difficulties to understand legal revisions and licensing processes remain. As soon as these are clarified, I am sure Japanese investors would act more aggressively,” he said.
Since 2014, Creed Group has been involved in a comprehensive co-operation agreement with the domestic An Gia Corporation to build a number of projects in Ho Chi Minh City.
Accordingly, Creed would invest around $200 million into An Gia by buying stakes and transferring technology. After five years of co-operation, both partners have developed more than 10,000 units with a total of more than one million square metres.
Some experts have predicted that the real estate market will be back to normal from the end of the second quarter when many large scale projects are in preparation to launch into the market.
According to Duong Thuy Dung, senior director of CBRE Vietnam, there could be two scenarios in the real estate market this year. In the first, the pandemic will be contained by June, leaving the average marketwide selling price expected to increase by 5 per cent on-year, with mid-end and affordable segments forecasted to have a modest growth rate of 1-3 per cent due to a large competitive supply.
In this scenario, high-end segments could get a price increase by 5 per cent on-year. Many luxury projects are licensed in District 1 and District 3, and their selling price is expected to increase from 5-7 per cent. The sold units volume would drop by 3 per cent mostly attributed to decrease of transactions in the high-end and luxury segments.
In the second scenario, the pandemic will be contained by September, which would cause a significant drop in new launches in 2020. The supply decline would mainly concentrate in high-end and luxury segments. Primary selling prices could drop by 6 per cent on-year as the majority of the supply will be in the mid-end segment. Meanwhile, the transaction volume under this scenario could plummet due to the restrictions in public places.
CBRE forecasts that approximately 13,575 units could be sold within this year, meaning a decrease of 55 per cent compared to last year.
