Regardless of market difficulties, landed property remains the preferred choice for investors, and the demand for the segment is projected to continue its upward climb in the next few years

What’s happening in the market shows that the condo segment, especially the luxury apartments, is surrounded with many difficulties. Abundant supply forces most developers to offer incentives to potential buyers, designing different promotion programs to boost their sales. Interest rate support, flexible payments, discounts in cash, a lucky draw for a car or motorbike, and giving savings books and even gold are what developers offer in hopes to quickly clear their stocks.

Unfortunately, high interest rates and the current credit tightening policy are discouraging many people from buying apartments for accommodation. Because of low liquidity, the condo market has seen fewer secondary investors than in the past. Unlike developers who now feel as if they are on the hot seat, buyers are adopting a wait-and-see attitude, hoping housing prices and interest rates will come down further. All these ingredients have negatively affected developers’ business performance so far.

However, the landed property segment, including villas and townhouses for sale, has continued to see stable development, with the primary market still achieving strong numbers during the first quarter of this year. The preferred choice of landed housing among Vietnamese people is supporting the segment.

Tracking the local market beat, property services provider Savills Vietnam reported that demand for landed property in HCM City remained strong as the market saw the absorption rate of the primary market recorded at 23%, a six-percentage-point improvement compared with the fourth quarter of last year.

The main stock of both the primary and secondary markets is concentrated in the east and south of HCM City, including districts 2, 7, 9 and Nha Be. There are some 60,000 land lots from 164 projects located in seven districts including 2, 7, 8, 9, Nha Be, Binh Chanh and Thu Duc in HCM City. These districts, with their improving infrastructure systems connecting them directly to the central business districts, have larger quantities of land lots and more transactions than others.

Nguyen Nguyen Thai, head of residential project marketing of CB Richard Ellis Vietnam (CBRE), said that the residential market has seen a trend in property investment between the apartment segment and the villa and townhouse segments. With the same investment capital, from US$170,000, buyers have considered buying landed properties in outlying districts rather than buying luxury apartments in the city center.

Thai said the market used to see a half-and-half proportion between the number of customers buying apartments in districts 2 and 7 and villas in District 9 and Nha Be District. However, the proportion now is recorded at 30% and 70%.

Unlike the so-called affordable apartments, for which pricing is the most interesting element for buyers, the villa and townhouse segment targets well-to-do buyers who just pay attention to living environment and can pay by their savings.

Instead of keeping their savings in cash, some people are looking at property as an investment vehicle to protect their assets against further currency devaluation. That explains why land lots in fringe districts and neighboring localities such as Binh Duong, Long An and Dong Nai, where land prices are still affordable, remain attractive to many people.

The liquidity of the land lot segment in the residential market is among the many reasons encouraging some developers to shift their investments to landed properties.

For example, the central coast city of Danang has witnessed Trung Nam Corporation, after withdrawing from a 48-story development in the city, get off the ground its Golden Hills urban town project, which covers some 400 hectares in Hoa Hiep Bac in Lien Chieu District. Phuong Trang Corporation has launched Phuong Trang New Town Danang Bay, which covers 147 hectares along Nguyen Tat Thanh Street. As well, some other companies have joined the land lot market in the city where there are some 3,200 land lots and an additional of 5,200 ones to be launched into the market toward the end of the year.

In the capital city of Hanoi, Sai Dong Urban Development and Investment Joint Stock Company, an affiliate of Vincom Corporation, has launched its Vincom Village multipurpose project in Long Bien District. Some VND10 trillion will be set aside to develop the project on 183.5 hectares with different sections, including a section for villas.
Relating to the beat of the Hanoi market, Savills Vietnam reported prices of villas and townhouses in the capital city continued to increase in the first quarter of this year, 20% for villas and 15% for townhouses. Average secondary asking prices recorded around US$6,400 per square meter and from US$800 to US$1,200 per square meter for districts far from the central business quarter. The demand for the properties is identified among mainly wealthy Vietnamese.

Property service providers said that with a higher absorption rate, the villa and townhouse performance in the HCM City market would remain relatively stable in the short term. The market will see 118 projects provide some 54,000 housing units in the next five years, with the number of townhouses expected to double that of villas. The future supply comes mainly from suburban districts.

Savills Vietnam projected that new housing construction licences granted would encourage the demand for landed property to continue its upward trend in the next few years.

Source: SGT