Land Plot Segment to Prevail in 2021

10:00:30 AM | 14/1/2021

According to DKRA Vietnam Joint Stock Company, in 2020, the residential real estate market in Ho Chi Minh City witnessed a decline from 2019 in most segments. Notably, resort real estate “hibernated". Meanwhile, the vicinity of Binh Duong and Dong Nai enjoyed remarkable development, especially in the land plot segment.

Decline in supply and demand

At the event "Report on the residential real estate market in Ho Chi Minh City and surrounding areas: The market push in 2021" recently organized by DKRA Vietnam Joint Stock Company, DKRA representative said that in Ho Chi Minh City, except for the townhouse and villa segments, which had increased over 2019, all remaining segments had declined in both supply and demand. Meanwhile, Binh Duong emerged with a supply of up to 5,627 land products and about 10,526 apartments, Dong Nai led the new supply of townhouses and villas (2,749 units), the resort real estate segment became stagnant.

According to DKRA, in 2020, Ho Chi Minh City and neighboring provinces recorded about 84 projects for sale (about 13,179 plots), about 8,519 plots of which were sold, accounting for approximately 65% of the new supply. Projects adjacent to industrial parks, industrial clusters, small ground area, and convenient transport infrastructure strongly attracted investors with good capital flows.

The land plot market in the vicinity continued to occupy the main position in the total supply due to the increasingly scarce land fund in Ho Chi Minh City. Binh Duong province took the lead with about 43% of the new supply in the market (5,627 plots). In Ho Chi Minh City, the new supply came from seven projects (564 plots), equaling 33% of the previous year. The consumption rate reached 59% (about 334 plots), equal to 21% compared to 2019.

On the other hand, the new supply of apartments was concentrated in Ho Chi Minh City and Binh Duong province. The city and surrounding areas recorded about 88 projects launched for sale (about 30,042 units) in the past year, mainly in Ho Chi Minh City and Binh Duong. The consumption reached about 26,313 units, accounting for approximately 87.6% of the new supply. Binh Duong emerged as the focal point of the apartment market with a series of projects launched for sale, providing about 10,526 units, accounting for 35.1% of the total new supply.

Also according to DKRA, in Ho Chi Minh City, the supply and consumption continued to decrease from 2019. In 2020, Ho Chi Minh City had about 56 projects launched for sale (about 17,579 units), equaling 71.7% of the same period last year. The consumption of the new supply reached 86.6% (about 15,229 units), equal to 66.2% compared to 2019, the grade A apartment led the market while the grade C apartments were almost absent. The Eastern area continued to lead in the new supply and consumption during the year. The primary price level increased sharply, but the liquidity of secondary transactions decreased.

In addition, the townhouse and villa segments had an increase in supply and demand compared to 2019. Specifically, according to a survey by DKRA, the new supply of townhouses and villas increased in 2020, focusing on Dong Nai province (38% of total new supply) and Ho Chi Minh City (34% of total new supply). The market witnessed the emergence of large urban areas of hundreds of hectares, which were well developed and fully equipped.

In general, these urban areas have convenient transport infrastructure locations connecting the suburban districts or the area adjacent to Ho Chi Minh City.

In Ho Chi Minh City, although new supply and consumption increased, but mainly in District 9. Specifically, Ho Chi Minh City had 18 newly launched projects (about 2,504 units), up 59% compared to the previous year. The consumption rate reached 76% (about 1,891 units), an increase of 75% compared to 2019. The Eastern area backed by the information on Thu Duc city establishment continued to be the focus of the market, leading the supply and demand. Except for the Eastern area, the primary prices of premises were almost unchanged, while the secondary transaction slightly decreased due to the impact of the pandemic.

Notably, the supply and consumption of the resort and coastal villas segments was at a record low in five years. In 2020, the supply and consumption of coastal villas decreased to the lowest level in the past five years. The whole market received 541 coastal villas from 10 projects, equal to 21% compared to that of 2019 (2,606 units). The consumption rate reached 44% (about 239 units), equal to 12% compared to the previous year.

Market trading was concentrated on new projects, developed by reputable developers with a complete ecosystem and operated by international brands. In general, the inventory of coastal villas on the market today comes mainly from old projects that were opened for sale before.

The segments of townhouses and coastal shop houses in the complex have been gradually restored and continue to attract the attention of customers.

At this event, DKRA also said that 2020 was a bleak year for the resort and condotel real estate segments - when they fell into a state of "hibernation". Similar to the type of coastal villas, the new supply and demand for condotels plummeted, almost falling into this state. In the whole year of 2020, there were three new projects opened for sale, providing 525 units to the market, only equal to 5% of the previous year. The consumption rate was about 65% (342 units), equal to 4% compared to 2019. The transactions mainly focused on newly launched projects of large investors with transparent legal procedures and construction progress guaranteed.

Land plot will remain the top investment channel in 2021

According to forecasts from DKRA, the new supply and demand of the land plot segment in 2021 may recover and increase compared to 2020, mainly in neighboring provinces of Ho Chi Minh City such as Long An, Dong Nai, Binh Duong and Ba Ria - Vung Tau. Land plots will continue to be selected as the top investment channel.

In the apartment segment, the new supply will increase sharply in most localities. The demand will increase as compared to 2020, but it is not likely to be as vibrant as 2019. In Ho Chi Minh City, the Eastern and the Southern areas continue to maintain a large proportion of the new supply. Grade A and B apartments will lead the market, while Grade C supply continues to be scarce.

The new supply and demand in townhouses and villas is expected to recover positively and slightly increase compared to 2020. Dong Nai can continue to lead the new supply. In Ho Chi Minh City, the Eastern and the Southern areas still account for a large proportion of the supply. Projects located in large urban areas, well-planned by reputable investors and valued at about VND10 billion/unit, will be a popular choice.

For resort real estate, the new supply of condotels and coastal villas may increase compared to 2020, mainly in familiar markets such as Binh Thuan, Khanh Hoa, Phu Quoc and Ba Ria - Vung Tau. The overall demand of the whole market is still low, there are not many positive signs for sudden changes. In addition, the integrated resort model continues to receive special attention, customers trust the brand of international operation management more than the program with commitment to profit.

Source: Vietnam Business Forum