In Vietnam, supply of hi-end condos rises fast, outstrips affordable housing Customers are seen at a condo project of Nam Long Co. in Binh Chanh District, Ho Chi Minh City, on May 18, 2013. Tuoi Tre The supply of high-end housing and condominium projects in the first half of this year increased so fast that it eclipsed that of affordable units which have helped the market go through the most difficult times in the past seven years. In the first six months of 2015, the supply of apartments priced at around VND1 billion (US$46,000) each in Ho Chi Minh City was completely outperformed by those fetching over VND2 billion ($92,000) per unit. Nguyen Van Duc, deputy director of Vietnamese realty firm Dat Lanh, told news website VnExpress that more than 40,000 units were offered for sale in the first half. Among them, 80 percent – or around 32,000 units – have a common price ranging from VND27 million ($1,242) to VND40 million ($1,840) per square meter. With an average price of VND30 million ($1,380) per square meter and an average floor area of 70 square meters per apartment, each unit is worth around VND2.1 billion ($96,600). So with 32,000 units, the total value of all of the properties is around VND67 trillion ($3.08 billion). Each affordable apartment, priced between VND13 million ($598) and VND19 million ($874) per square meter, has an average floor area of ​​55 square meters. With a typical rate of around VND15.5 million ($713) per square meter and an average selling price of VND850 million ($39,100), the total value of the properties in this segment was approximately VND7 trillion ($322 million). According to a report on the local realty market conducted by real estate service provider Savills Vietnam, the total supply of apartments in Ho Chi Minh City in the next 2-3 years can be up to 60,000 units, of which over 70 percent are mid-range and hi-end condominiums. High-end units prevail in Savills, CBRE reports In the past six months, the segment of affordable apartments has declined significantly, and this trend may continue to strengthen further in the second half of 2015, the Savills Vietnam report said. Another report on the Vietnamese real estate market of consultancy CBRE Vietnam also pointed at a similar story. As of the end of June, the liquidity of the hi-end segment in the Ho Chi Minh City market was near the entire liquidity in 2014, which equaled that of 2012-13 dominated by affordable housing, the CBRE report said, adding that this signifies a switch to more expensive units. The high-end segment reported record absorption in Q2/2015 with approximately 5,800 units sold, while affordable housing saw sales of around 2,800 units during the same period, according to the report. The same circumstance took place in Hanoi in Q2/2015. The Hanoi market continued to show positive signals, with 5,137 new units launched at 19 projects, a 93 percent rise year on year, according to the CBRE report. High-end apartments in that market continued to take a larger share in the newly launched units. Notably, for the first time, high-end apartments accounted for approximately one-third of the total new launch stock, at 30 percent, which is higher than in any quarter since 2012. The number of new high-end units tripled to 1,518 in the second quarter compared to the first. In addition, the share of transactions for high-end apartments has increased, as in the first six months of 2015, high-end units occupied 22 percent of total sales, as compared to six percent in 2013 and 18 percent in 2014. At the same time, the proportion of affordable apartments, which used to dominate the market, dropped to 26 percent in the first half, down from 49 percent in 2013 and 33 percent in 2014, the CBRE report revealed. According to the Vietnamese Ministry of Construction, in the first half of 2015 there were approximately 14,000 successful real estate transactions, 2.5 times that of the same period last year. The excitement taking place in the market has helped reduce the entire inventory to about VND67 trillion ($3.08 billion), down over 50 percent compared to 2013. In speculative mood Good market liquidity, as announced by real estate businesses, is mainly triggered by those who buy as investment or to lease, real estate service providers said. Do Thu Hang, head of the research and consulting department of the Savills Hanoi business, told newswire VietNamNet that secondary investors and speculators outnumber homebuyers in many projects. This may affect prices, as when these secondary investors and speculators engage in buying and selling in the market, what they expect is that the price of their properties will rise, Hang said. This may also have very minimal impacts on the market as it only happens in a certain number of projects, she said, adding that it therefore will not influence homebuyers’ final decision because there are many projects and products to choose from. Duong Thuy Dung, director of the research and consulting department of CBRE Vietnam, told reporters at a press conference late June the firm also found that many of the buyers engaging in their surveyed projects in Hanoi and Ho Chi Minh City wanted to buy so that they could lease or resell later. TUOI TRE NEWS