Real Estate Market Shows Signs of Recovery

3:20:17 PM | 1/26/2021

Colliers International Vietnam has just released a Knowledge Report on Vietnam Real Estate Market, Quarter 4, 2020. The report provides an overview of Vietnam's economy in 2020 with notable indicators such as GDP, CPI, FDI, total retail sales or trade balance. The report also provides in-depth data on prominent real estate segments in the three main cities of Hanoi, Ho Chi Minh City and Da Nang.

The growth of gross domestic product (GDP) in the year 2020 is 2.91%. Although this is the lowest growth figure in the period 2011-2020, in the context of the Covid-19 pandemic, this is impressive growth, making Vietnam one of the four countries with the highest growth rates in the world.

The retail market has shown signs of recovery, especially in Hanoi and Ho Chi Minh City. Many high-end brands still expanded their operations in Vietnam during the pandemic. The noteworthy trend is that many retail giants move to the outskirts of big cities to take advantage of the rental price or good purchasing power from the growing middle class. Vicom Mega Mall Ocean Park in Gia Lam District (Hanoi), Socar Shopping Mall, Vincom Megamall Grand Park (Thu Duc City) and Elite Mall (District 8, Ho Chi Minh City) are projects that demonstrate this trend.

The long-lasting impact of the Covid-19 pandemic has made tenants remain cautious, continuing the trend of looking for offices in lower segments. However, the occupancy rate is still relatively high, probably stemming from the continued inflows of FDI into Vietnam. The average asking rents were generally equal or even higher than the previous quarter, in all three cities, Hanoi, Da Nang and Ho Chi Minh city. Da Nang is a market that recorded a rather high average asking rents, from 27 USD in quarter 3/2020 to 35 USD/m2/month in Q4, 2020.

Active signs are shown quite clearly in the industrial real estate segment. The average rental price of industrial real estate in Ho Chi Minh City is the highest in the country (at 160 USD / m2 / term). Among the southern provinces, Long An is an impressive province attracting FDI investment, including 1,079 projects and a capital of 6.6 billion USD (December 2020 data) and is emerging as a “ competitor ” of Ho Chi Minh City in the industrial real estate segment. Industrial parks in Hanoi have not suffered many negative impacts from the Covid-19 pandemic, and still maintain stable operations. The average asking rents and occupancy rates are still at the same level as in Q3, 2020. Dong Anh and Thach That receive the most attention from foreign investors as most of the industrial zones in the region are concentrated in these two districts.

The condominium market is quite different between the two largest cities in the country. In Ho Chi Minh City, more than 3,600 new apartments were launched in Q4 / 2020, down 26% year-on-year and mainly in the mid-end or high-end segment. High-end apartments in District 2 are even 7% higher than in 2019. In Hanoi, the market was relatively quiet with most mid-segment deals taking place in the suburbs. Some investors from Ho Chi Minh City like Bitexco or Him Lam have started implementing large-scale projects in Hanoi.

Besides East area continues to be the focal point of the villa - townhouse market in the city. In HCMC, nearly a third of new launches in 2020 are in District 9. The landed property market in Hanoi is still attractive despite the pandemic. Most transactions in this quarter came from the secondary market. The next phases from big projects such as Starlake, Ecopark, Gamuda city are open for sale. Good sales performance is still recognized in properties with good construction quality and rapid construction progress.

Nguyen Mai (Vietnam Business Forum)