Prices up 1.7% and 1.3% for HCMC and Hanoi apartments in 4Q2017

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January 16, 2018 9:00 AM SGT
Prices for apartments in Ho Chi Minh City’s (HCMC) primary market rose 1.7% q-o-q and 3.6% y-o-y in 4Q2017, according to the Vietnam Property Market Brief by JLL.
Source for table & charts: JLL Research
A total of 15,193 units were launched in the Vietnamese city in 4Q2017, which is a 29% increase q-o-q and 71.2% increase y-o-y. Most of the units launched were in the mid-end segment, which accounted for 45% of total launches. Sales, totalling 16,181 units in 4Q2017, outpaced the number of units launched. Units priced from US$1,000 to US$2,000 psm ($124 to $248 psf), the mid-end segment, accounted for 58% of the sales volume, notes JLL. And a good proportion of the sales, 35.2%, were of units that will be completed and handed over by end-2018.
In HCMC’s secondary market for apartments, prices also rose in 4Q2017, but the pace of 0.1% q-o-q and 0.5% y-o-y was more subdued compared with those in the primary market. The performance was better than in 3Q2017, however, which registered a price decline of 0.7% q-o-q and a slight 0.1% y-o-y increase.
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In the landed residential segment, which comprises villas and townhouses, primary market prices fell 3.8% q-o-q in 4Q2017, but registered a 13.6% y-o-y increase. The number of units launched totalled 1,802, which is a 30% q-o-q increase. Owing to strong market momentum, 2,139 units were sold, says JLL, who adds that this is nearly triple the 4Q2016 figure, and the highest on record since 2000.
According to projections by JLL, nearly 36,000 apartment units and 3,500 landed housing units will be launched in HCMC in 2018, and more than 50,000 apartment units will be completed. Most of the apartments launched will be in the affordable segment, mainly located in Districts 2 and 9. Sales volume will be driven by this segment, which caters to owner-occupiers. “The sales rate is likely to remain in positive territory, especially in the villa/townhouse market,” says JLL.
About 9,400 apartment units were launched in Hanoi in 4Q2017, bringing the full-year launch supply to 31,000 units. Most of the new launches were in the affordable and mid-end segments, which comprised 80.4% of units launched, says JLL.
The two segments also accounted for the bulk of the units sold in 4Q2017, comprising 77.5% of the primary market sales volume. Similar to HCMC, sales in Hanoi’s primary market also outpaced the number of units launched, ringing in at about 9,800 units. This is a 7.3% increase over 3Q2017, notes JLL.
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In 4Q2017, prices increased 1.3% q-o-q in the primary market, but fell 3.7% q-o-q in the secondary market. More than 55,000 apartment units will be completed in Hanoi in 2018. JLL expects prices in the primary market to be stable, and sales rates to rise this year, on the back of owner-occupier demand. “The apartments in the affordable and mid-end segments will continue to attract buyers, especially young families,” says JLL.
According to Savills Vietnam, the country’s GDP per capita rose 10% y-o-y to US$2,385. The 6.8% GDP growth exceeded the government’s target of 6.7%. It is also much higher than the 2011 to 2016 period, says JLL. This was because of growth in nearly all the economic sectors. The industrial and construction sectors grew 8% y-o-y in 2017, followed by the service sector, which grew 7.4%.
“Inbound tourism continues to grow with 12.9 million international visitors for 2017, up 29%,” says Savills. Accommodation and F&B revenue also rose 12% y-o-y. According to JLL, the number of tourist arrivals in 2017 is the highest on record, and retail sales also saw strong growth last year.
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In 4Q2017, 75,000 sq m of retail space was added to HCMC’s non- CBD submarket, according to JLL. Meanwhile, about 48,500 sq m was taken up. The overall retail gross rent rose 0.6% q-o-q and 2.5% y-o-y to US$47.2 psm per month. Retailers providing affordable and mid-range products and services continued to expand in the quarter. Owing to the limited available space in the CBD, the rent gap between HCMC’s CBD and non-CBD submarkets has widened.
As at end-2017, there were more than 250,000 sq m in HCMC’s retail supply pipeline. Most of them were located outside the CBD, says JLL. In 2018, rents for retail space are expected to rise in the CBD and remain stable in non-CBD locations, it adds. “International retailers will likely continue entering the market, driven by the healthy long-term prospects,” says JLL, who also expects sustained demand from F&B chains, owing to the developing trend of people dining out.
In 4Q2017, international fashion retailers Zara and H&M opened their first stores in Hanoi. Owing to good performance at new projects and “several mature shopping centres”, more than 5,500 sq m of retail space was taken up in the quarter, according to JLL. Notwithstanding the improvement in overall occupancy rate from 82% in 3Q2017 to 82.4% in 4Q2017, the overall monthly gross rent for retail space in Hanoi declined 1.4% q-o-q to US$28.3 psm. Monthly rents at malls in the CBD were unchanged at US$100 psm, while those in the non-CBD submarket fell 1.6% q-o-q to US$27.1 psm.
According to JLL, the total supply is expected to increase sharply in 2018 with more than 320,000 sq m set to enter the market, mostly in the non-CBD submarket. JLL also notes that AEON Mall Ha Dong and Ciputra Mall Hanoi by global retail giants AEON and Lotte Group, respectively, will be completed in Hanoi from 2020 onwards. “As the rents at new projects are expected to be lower than the current average rents, along with the abundant supply, they are likely to decline over the next [few] years,” says JLL.