Demand for luxury and mid-end apartments forecast to increase in the future in both Hanoi and Ho Chi Minh City due to changes in the Law on Housing.
The apartment for sale segment continues to be the most vibrant in both Hanoi and Ho Chi Minh City, according to the latest report released by Cushman and Wakefield on July 3.
In the second quarter Hanoi saw moderate launch activities across all grades, with one Grade A and four Grade B and C projects yielding nearly 1,200 units in total.
The total primary supply in the quarter was more than 15,000 units, of which Grade C accounted for the greatest market share (56 per cent), followed by Grade B (42 per cent) and Grade A (2 per cent).
The quarter also saw better sales performances across all grades, the report said. This can be attributed to improvements in customers’ rapidly improving confidence in the market in addition to punctual construction progress, promotions, and flexible payment terms from developers and a rent guarantee program applied at mid and high-end projects.
Ho Chi Minh City, meanwhile, witnessed the launch of a large amount of new supply across all grades. As at the second quarter there were nearly 25,300 available units for sale across all grades in the primary market, up by a significant 121 per cent year-on-year.
The residential market in the city, which had been depressed for several years, is experiencing strong signs of recovery, with transaction volumes across all grades in the second quarter registering a moderate increase of 1 per cent quarter-on-quarter but up 236 per cent year-on-year.
Cushman and Wakefield’s predicted that, in both Hanoi and Ho Chi Minh City, affordable apartments of small size should continue to be the most sought after. Demand for luxury and mid-end apartments, however, are forecast to increase in the future.
Mr. Jonathan Tizzard, National Head of Research and Valuation at Cushman and Wakefield, said that the new Law on Housing, which came into effect on July 1 and allows foreigners to own commercial properties in Vietnam, will help to strengthen demand, especially for mid to high-end projects. “Guarantees from banks being required by developers for new developments will add more confidence to the market,” he added.
He also pointed out that the cost of these guarantees is expected to be passed on to the consumer. “The residential market in Ho Chi Minh City and Hanoi continues to improve and we expect this to continue throughout 2015 and beyond,” he said.