Vietnam’s real estate dragon ascends
Vietnam’s real estate dragon ascends
Vietnam’s recent strong macroeconomic performance and foreign direct investments have served to supercharge the country’s thriving property sector even further
This is Part One of Property Report’s three-part series on the rebirth of Vietnam’s property market
By Thomas Maresca
It doesn’t take a genius to see which direction Vietnam’s residential property market has been going in recent times: straight up, as a cursory survey of the skyline in Ho Chi Minh City will affirm. Cranes slash the sky as the city sprouts dozens of soaring apartment complexes, including what will be Vietnam’s tallest building, the 81-storey anchor of the Vinhomes Central Park Residence Project.
Development is spreading not just vertically, but radiating outwards as well, as neighbourhoods outside of the central business district get in on the act. The capital Hanoi, not to be outdone, has been witnessing its own robust property boom.
Residential properties are at the front end of the growth, accounting for a string of headline-grabbing signature developments. According to research by CBRE Vietnam, approximately 41,787 units were launched in Ho Chi Minh City in 2015, 2.2 times more than the previous year.
Hanoi showed a 70 percent annual growth, with an estimated total 28,283 units launched across all different segments.
More: Investing in Vietnam – HCMC vs Hanoi
Activity has continued into the first part of 2016. In Ho Chi Minh City in Q1 2016, the condominium market saw a 38 percent year-on-year growth in new supply, totalling 7,708 units. Hanoi’s Q1 launches fell 18 percent, year-on-year, with 4,318 units launched from 16 projects. However, sales activity remained robust, with 4,048 units sold, for a small year-on-year decrease of 5 percent.
Enthusiasm among buyers is sky-high. Investors have been flocking to sales events, which have become full-fledged spectacles filled with flashing lights, blaring music, glamorous presenters and throngs of eager customers.
“People are buying, and queuing to buy, if you go to some of those events,” says Marc Townsend, managing director of CBRE Vietnam and one of the judges of the Vietnam Property Awards 2016. “I didn’t expect to see that again in my lifetime. The last time we had a cycle like this was in 2007.
More: Is Vietnam’s property sector getting too hot for the government’s comforts?
“But there was no bank lending at that time, and no one was really in a hurry to go and live in District 7, no one was really in a hurry to go and live on the far end of the East-West Highway,” he says, referring to areas outside the Ho Chi Minh City centre that have now become hotspots for development.
The boom is undergirded by Vietnam’s strong recent macroeconomic performance. Supported both by foreign-invested exports and domestic demand, the economy grew 6.68 percent last year, beating government estimates of 6.2 percent. GDP has taken a downturn in Q1, this year, dipping to 5.46 percent – its slowest growth in two years, dragged down significantly by an agricultural sector that is taking a beating from the country’s worst drought in 90 years. The industrial and construction sectors still managed a 6.72 percent growth, and committed FDI is up 119 percent year-on-year, to USD4 billion.
But will the boom continue to be a boon? Come back tomorrow for Part Two.
This article originally appeared in Property Report magazine’s Issue no. 136.
Source: Property Report