Property Market
• Ho Chi Minh City presently ranks at the first place for average real estate yields in Asia Pacific and at the third place in city development prospects (2010, Price Waterhouse Coopers, Urban Land Institute)
• Real estate ranks as the second most attractive sector for foreign investment, according to the statistics of Vietnam's Ministryof Planning and Investment.
Main Drivers of the Real Estate Market:
o Solid economic growth and favorable demographics
- 15 years of strong GDP growth.
- High population growth rate (1 million additional citizens per annum)
- Growing middle class.
- 50% of the population is under 30.
o Increasing urbanization
- 10 million sq.m for new housing per year.
- Government mandate to expand key metropolitan areas.
- Continued development of key infrastructure, including roads, bridges, ports and electricity.
o Growing remittances from over 3 million overseas Vietnamese
o Developing real estate legal framework
- Two significant laws were enacted in the second half of 2009:
(i) Consolidation of the land use right certificate and land ownership certificate into one document.
(ii) Expansion of the rights of overseas Vietnamese to purchase and own houses in Vietnam.
Market Highlights:
o Residential:
- Strong demand for affordable segments at prices below $1,000/sq.m
- High-end: $1,900/sq.m, Mid-end: $1,300/sq.m, Affordable: $950/sq.m
- HCMC is seeing new projects in the East and South whilst the new supply is dominant in the West of Hanoi.
o Office:
- Fierce competition due to oversupply.
- Local companies remain the key demand driver.
- Grade A: $37/sq.m in HCMC ($39/sq.m in Hanoi); Grade B: $19/sq.m in HCMC ($26/sq.m in Hanoi)
- Supply of 1.4 million sq.m Gross Floor Area in HCMC and 0.6 million sq.m in Hanoi with over 1 million sq.m pipeline for the next 3 years.
o Retail:
- Modern retail space, hypermarkets and shopping centers continue to see high demand.
- Central Business District: $121/sq.m in HCMC ($55 in Hanoi) ; Non-CBD: $46/sq.m in HCMC ($35 in Hanoi)
- Fashion, lifestyle and F&B retail are the dominant themes in both Ho Chi Minh City and Hanoi.
o Hospitality:
- 2.5 million travelers per year, with a double-digit y-o-y growth in tourism.
- New projects are presently being considered by international hoteliers in Hanoi.
- No new top-tier hotel launches in HCMC for the moment.
(Sources: CBRE, Savills, Colliers, DTZ, Q2 2010)
Useful links on Vietnam's real estate market
