Vietnam real estate market | Q4 2018 quarterly report
- Vietnam’s economy: Vietnam’s economy continued to perform well in 2018, with GDP growth estimated at 7.08% y-o-y, the highest growth rate since 2008. Implemented FDI in 2018 surged 9.14% y-o-y, while Industrial Production Index increased 10.2% y-o-y.
- Office market: The market in 2018 continued to favor the landlords in both Hanoi and HCMC, due to limited new supply while demand remained strong. As a result, vacancy rates had y-o-y decreases while asking rents increased in both cities of HCMC and Hanoi, though more noticeably in HCMC.
- Condominium market: In 2018, HCMC and Hanoi welcomed approximately 30,000 newly launched units in each city. As Hanoi market witnessed the launch of some large-scale townships targeting mid-end buyers, the share of this segment in new launch supply for the year expanded significantly in Hanoi, while that decreased in HCMC.
- Retail market: New supply in both HCMC and Hanoi is concentrated in the non-CBD areas. In HCMC, non-CBD projects on average witnessed a slight decrease both in terms of rent and vacancy rate, while in Hanoi both metrics had a slight increase. CBD performances were relatively stable for both cities.
FULL QUARTERLY REPORT
Amid the prevailing global high uncertainty and growth slowing down, Vietnam’s economy still achieved stable growth with 6.8% in 1H 2019. As of Q2 2019, the GDP growth reached 6.71%, slightly lower than the Q2 2018 rate yet still higher than the growth of the second quarter during the 2011-2017 period.
Looking back, there has been a contradictory scene of success and struggle among retail stories in Vietnam during the first half of 2019. Mid-end segment continues to dominate the market with new supply of around 70% - 80%, residential supply will move further away from the 10km radius of the CBD.
Due to limited supply in the 1H 2019, HCMC real estate inventory overall was absorbed. Sales momentum continued to be positive in Q2 2019 with more than 80% of new launch units having been absorbed. Office market performance with vacancy rates of both Grade A and Grade B slight decrease.
In line with the geographical diversification real estate supply emerging locations such as Ha Dong, Gia Lam, Hoai Duc and Long Bien were observed. The market has witnessed strong demand from both local and foreign investors for projects at locations close to industrial parks "The East".
Due to the impact of the delay in licensing process of new projects and the decreasing clean land bank in Ho Chi Minh City, developers concentrate on product with high value. Decreasing inventory together with limited new supply are leading to active secondary market.
According to Global Consumer Confidence Survey by Nielsen, Vietnam’s Consumer Confidence Index reached 122 points, ranked fourth in the list of the most optimistic countries in the world. This challenge is likely to continue in the coming year with limited new supply in central business district.
Leveraging opportunities from stable domestic demand and increasing foreign interest, especially in HCMC and Hanoi is rising due to high pace of urbanisation. Additionally, the steady growth of population average 2% per annum each city as seen over the past five years will drive constant housing demand.
Vietnam’s two largest metropolitan areas expect to welcome a wave of new supply, of mostly Grade B offices, in 2019. The expected supply growth in 2019 of 13% and 11% in HCMC and Hanoi, respectively, will shake the office market for the first time after a quiet period.
The US’s economy keep growing although problems have arisen from the trade war against china. The Belt and Road Initiative (BRI) of China can be a way out for them although Chinese trades in the planned region will be hampered by US’s companies movements into these countries.
Vietnam's economy retains the growth momentum, real estate market prices in HCMC were stable q-o-q across all segments "Except Office Leasing Grade A". A slight decrease in selling price in USD term was due to the VND devaluation recently. Supply in villas and townhouses are expected to remain scarce to end 2018