|Grade B residential projects were very well received in Hanoi during 2018.
Duong Duc Hien, Savills director of residential sales for North and Central Vietnam claimed that in Hanoi, Grade B residential projects, especially villas, townhouses, semi-detached townhouses and shophouses, were very well received in 2018. Despite such enormous demands, a proven shortage in supply of these sectors lingered.
In addition, Grade A projects operated relatively well in the first half of 2018 in Hanoi. Due to high urbanization rate, convenient transportation, improved infrastructure and huge commercial potential, the Hanoi property market witnessed spectacular breakthroughs in prices throughout 2018.
“Investors, hence, are expecting growth of luxury developments, especially in such a ‘booming’ market like Vietnam,” Hien asserted.
Meanwhile, in Danang city, the land segment thrived on active developments. In 2018, Savills noted numerous requests from customers looking for second home products.
Hien further said that investors are showing changed perspectives for the second-home market in Danang and Vietnam at large. Projects that offer rental guaranteed programs will no longer be the optimal product line. In contrast, pure, straight-forward property products with the potential for value appreciation and clear-cut ownership are signaling its return.
He believes that customers, therefore, are eyeing further quality and transparent products in Danang in 2019 while investors expect more urbanizing developments in the central city rather than just hospitality products.
As for Ho Chi Minh City (HCMC), Nguyen Khanh Duy, director for residential sales from Savills Vietnam’s HCMC branch laid out high expectations of luxury residential projects in the southern city.
Duy exemplified his point of view by the increasing demand for penthouse or million-dollar villas these days, revealing that “we now face struggles in finding stocks for high-end residential customer segment.”
Besides high requirements in terms of location, exclusive design, ideal living environment, comfortable living space, and others, a luxury residential product must match the taste of its owner. However, the supply of luxury residential products remains limited, the Savills expert said.
The average price of this sector in HCMC is relatively lower in comparison to other regional markets such as Singapore, Hong Kong (China), Bangkok, Tokyo or Taiwan (China).
In general, the limited supply, increased demand and potential of this sector do not simply reflect the housing demand of high net-worth individuals (HNWIs). “It also means that HWNIs are actually looking for an ideal investment channel for capital appreciation,” Duy said.
As per residential products, Sunny Hoang, associate director for international residential sales from Savills HCMC, said the number of foreign and local investors interested in HCMC’s residential real estate market has increased tremendously in recent years due to a growing middle class/economy, an increase in reputable developers entering the market, and loosened housing regulations that leverage the purchasing process for foreigners.
Nevertheless, new residential products launched in 2018 still saw a considerable decline compared to the previous year, thus easing some concerns of oversupplying the market.
Additionally, with the lack of available land and new construction in core areas of HCMC, and the government’s decision on tightening the provision of grants to new construction projects in District 1 until 2020, prices per square meter for those newly built in these areas are set at an all-time high.
Investors buying into these districts anticipate lowering their investment risk as they view the overall location as very stable. As such, nearby districts such as District 2, 4, 7, and 9 are benefiting the most as demand remains very strong.
Hoang believes that overall, investors still consider Vietnam a potential alternative investment destination for its attractive entry price, potential for capital appreciation, and attractive rental yields.