High class apartment supply overwhelms other segments in HCMC

Ho Chi Minh City real estate market has recovered and grown unsustainably with a strong increase of high class apartment supply and shortage of low-cost social and commercial housing under large demand by low and medium income people, said chairman of the HCMC Real Estate Association (HoREA) Nguyen Hoang Chau.

An apartment complex in District 7, HCMC (Photo: SGGP)

The number of real estate transactions strongly hiked last year with over 26,000 successful ones, a 1.5 fold increase again that in 2014, reported HoREA. Apartments were offered for sale at the price 2-15 percent higher than 2014, it said.
Savills Real Estate Services Company reported that since the fourth quarter 2015, demand of high ranking rocketed up in developed areas of the city.
Transactions of apartments priced US$300,000 accounted for 28 percent of total.
High class projects have concentrated in the eastern part of the city including districts Binh Thanh, 1, 4, 7, 2 and parts of District 9 and Thu Duc; the southern part and the west and northwest including Tan Phu, Tan Binh, Phu Nhuan and Go Vap.
Analysis by CBRE group, American commercial real estate service provider, shows similar trend in which last year the price of high grade products jumped to US$ 2,025 per s.q meter.
Some projects in the city’s center areas are expected to open for sale this year with the price of over US$ 7,000  per s.q meter.
The market will receive over 45,000 apartments from 90 projects of all segments citywide. High class products will increase 20 percent over last year, HoREA forecast.
According to Mr. Le Hoang Chau, the Trans-Pacific Partnership (TPP) expected to take effect by the end of 2017 is forecast to create an investment movement into Vietnam and HCMC.
Besides it would attract much foreign direct investment capital and boost the real estate market’s growth especially in the segment of factories, apartments and offices for lease.
After six months of implementing the revised Housing Law 2014, HCMC has seen a higher than before number of house buyers who are overseas Vietnamese.
Besides 1,000 foreigners have registered to buy apartments mostly from high grade projects that are under completion phase.
In the pilot implementation phase of the revised law that permits foreigners to buy houses in Vietnam from 2008 to July 2015, the country had only 250 foreign house buyers.

By Luong Thien – Translated by Hai Mien

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