Supply shows signs of improvement q-o-q
Supply improved remarkably with 3,820 units officially launched, nearly doubling that of 1Q20. 48% of this was contributed by Akari Project in Binh Tan, which managed to sign SPAs for their first phases. However, this number was only a third of the quarterly average during the peak period of 2017-18, as the legal concerns continued to prevail in HCMC real estate market. As bright spots in the quarter, a number of projects in the Eastern areas of HCMC in District 9 and 2 managed to obtain the launching permission. Also, sales events were starting to gain steam since the gathering was allowed again given the virus being well under control in Vietnam.
Affordable and Mid-end segments drove market demand
Take-up in 2Q20 totalled 3,855 units, nearly equivalent to 2Q19 but also doubling that of 1Q20 figures. Most of the sales were made before the outbreak and only managed to sign the Sales and Purchases Agreement (SPA) this quarter. The top performers remained Affordable and Mid-end segments, contributing 83% of the total units sold, most of which were from the owner-occupier demand. For investors, they remained cautious and hesitant in making the investment as although Vietnam has succeeded in containing the Covid-19, worries about financial instability due to layoffs and pay cuts were still around.
Prices continue their upward trend despite uncertain conditions
In response to the Covid-19, the developers gave out attractive sales policies like price discount and the extension of payment schedule; however, it was noted that the prices were raised up slightly beforehand. This showed the developers' insist on their prices, given the scarcity of supply and the healthy demand from owner occupiers. Most projects recorded a moderate price increase of 1-3% q-o-q as a result. In addition, this quarter saw the entrance of a Luxury project in District 2 (Phase 1 Galleria of Metropoles Thu Thiem), and price increase in some projects reaching their handover (One Verandah, Giai Viet Central Premium), have together raised the average market
price, reaching USD 2,582 per sqm in 2Q20, up 27.5% y-o-y and 5.3% q-o-q.
The tightening supply is expected to continue with about 15,000-20,000 units scheduled to come online in 2H20, bringing the total number for 2020 up to 20,000-25,000. This is set to fall short of 2017-19 period when there was at least 30,000 units launched as the legal issues and the economic uncertainty remain in place.
Source: JLL's Property Market Brief 2020 - July 2020