Determining true attractiveness of luxury real estate in Vietnam
Determining true attractiveness of luxury real estate in Vietnam
Even in the context of global economic fluctuations, luxury real estate products are still attracting a growing customer base in Vietnam.
Starting as an enterprise distributing high-end interior materials and equipment, Rita Vo Group has expanded its business activities to other industries such as coffee, fashion, and sports, and plans to do business in the real estate market.
Chairman Vo Mau Quoc Trien said that the first project is expected to located in District 5 of Ho Chi Minh City. Covering 3,600 square metres, it is costing nearly $87 million.
“This segment serves only a few super-rich customers who have strong financial potential, and are supported by banks and partners, so they do not have difficulty in getting loans.”
“We target super luxury apartments segment such as 5-star hotel rooms with the lowest starting price of $12,000 per sq.m and the highest price depending on location,” said Trien.
The presence of Rita Vo Group is expected to spur the super-luxury real estate market in Ho Chi Minh City.
Even though the segment has seen its fair share of issues in the pandemic era, luxury real estate products still attract buyers. The Grand Marina Saigon project in District 1 has startled many with its initial sky-high transaction price of up to $18,000 per sq.m.
The Global City, located in Thu Duc city of Ho Chi Minh City, is also attracting the attention of investors because of its high price. Currently, a four-storey town house comes to $17,400 per sq.m.
Many other real estate projects in Ho Chi Minh City, often located in Thu Duc city, are seeing prices of millions of USD per unit, and are still out of stock. For example, Trung Thuy Group announced that the Lancaster Eden villa project would sell at around $4.35 million per apartment. Thirteen four-storey villas were sold out in quick fashion.
The luxury Define project of CapitaLand Development, the development arm of CapitaLand Group, also sold out of million-dollar apartments in its opening session.
Customer personalisation
Robert Barlett, CEO of British real estate business Druce, said that Vietnam is on its way to becoming a new Asian tiger, with a boom in the real estate market and the super-rich class.
“For example, Grand Marina Saigon has all the necessary elements to become a high-potential product, and therefore has become the first product in Vietnam to be selected by Druce for distribution,” said Barlett.
Real estate in the centre of Ho Chi Minh City has always remained attractive to global investors. The latest Knight Frank report also reflects this trend, as it shows that luxury real estate prices in the city centre increased by 8.4 per cent per year. From the perspective of the region, the owner of a branded apartment in the heart of Bangkok can sell his apartment for 80 per cent more than an unbranded project in the vicinity at the time of launch.
“Customers for these products already own some real estate and are looking for new products in new markets with high growth potential. Along with that, they also eye high-value land-based real estate in proximity areas that can be used as second and third homes for relaxing weekends with family,” said Ginny Nguyen, senior manager of Residential Real Estate at Savills.
“Grand Marina Saigon has all the necessary elements to become a high-potential product, and therefore has become the first in Vietnam to be selected by Druce for distribution.”
The quality and experience of luxury real estate products often explain the eye-watering prices. For example, a luxury apartment of The Marq project in District 1 costs $7,500-9,800 per sq.m excluding VAT for an area of 45-156sq.m.
These products boast precious marble floors and walls, imported kitchen equipment system, and private elevator lobby. In particular, a chain of high-class facilities including infinity pool, sky bar, gym, BBQ area, children’s pool, jacuzzi and sauna, and so on at the rooftop helps homeowners enjoy relaxing moments and the splendid view of the city.
Sales policy is also one of the special factors that helps these projects attract buyers. For example, some incentives for apartment buyers include interior packages worth up to $150,000; three years exemption from management fees; car parking fee incentives; and supportive policies for customers to pay 30 per cent of the apartment price before buying, with the rest paid within 12 months.
Vo Huynh Tuan Kiet, director of CBRE Vietnam, said that luxury housing prices in the Vietnamese market could increase to as much as $35,000 per sq.m in the next 10 years.
“This segment serves only a few super-rich customers who have strong financial potential, and are supported by banks and partners, so they do not have difficulty in getting loans,” Kiet said.
Kiet pointed out that using financial leverage by borrowing capital from many different sources for investment is a solution to diversify the investment.
However, the main factor affecting the attraction of luxury real estate products to investors is quality and potential. “Products with good quality and high growth price potential will attract many investors. On the other hand, for those with low growth potential, investors will have to consider their options very carefully,” Kiet added.
