Despite a record low supply, trading plummeted in the second quarter of 2020, according to Savills experts, the market in the second half of the year will recover.
Apartment supply is at a record low
According to Savills, the supply of new apartments in Q2 in Ho Chi Minh City is at a record low. Primary supply in the first half decreased 52% year on year, with more than 9,100 units, the lowest level in the last 5 years.
As explained by Savills, the long Tet holiday and the social gap have strongly influenced the sale plan. New supply in Q2 / 2020 reached more than 2,100 units from 4 newly opened projects and the next 10 periods, down 55% QoQ and 74% YoY.
There are 7 projects that have postponed their plans for sale to the second half. Only Sunshine Horizon opens for sale right before the social gap takes effect with a limited number of units and reaches more customers through online channels.
Due to reduced demand from foreign buyers and a more cautious psychology of developers, new projects in Grade A and B launched limited quantities, fewer than 100 units.
Savills Vietnam said that the pandemic has created new challenges for investors and buyers. Most investors are still cautious due to uncertainty about the market. Transactions in the first half of the year reached just over 6,800 units, down 55% year-on-year, the lowest level in the last 5 years.
Grade C performed best with 84% absorption rate and accounted for 64% of sales in the first half. All 3 new Grade C projects in the first half of the year achieved absorption rates of over 80%. Demand showed positive signs with absorption rate of 75%, a slight decrease of -4 percentage points year-on-year.
Customer behavior changed because Covid-19 reshaped the investor’s business strategy. The number of visitors to real estate information websites in the first half of the year recorded an increase of 23% per month.
Many developers have quickly adapted to the online sales model to increase sales and improve customer experience. In addition to Vingroup and Sunshine group that have made pre-pandemic moves on the application of technology in real estate business, Phu My Hung recently launched the first project focusing on online sales platform – The Antonia.
Supply recovered in the second half of the year
Savills data shows that the future supply by 2022 is expected to reach 147,000 units, of which Grade C will continue to dominate with 62% market share; Many developers have gradually turned to this segment due to high demand from the market. In the second half of 2020, more than 31,700 units are expected to launch.
Due to the delay in approving construction permits, the majority of future supply comes from the subsequent stages of existing projects. District 2 and District 9 continued to lead the supply, accounting for more than 53% of the market share.
Investment-focused infrastructure and continuously improved connectivity have boosted demand for housing in the eastern districts. One of the outstanding projects is Vingomes Grand Park – The Origami, accounting for 32% of total supply in the second half of the year.
Assessing the apartment market, Mr. Nguyen Khanh Duy, Director, Savills Real Estate Business Department said: “The pandemic caused many open-sale plans to be delayed and reduced the number of foreign buyers. The domestic market demand is still stable, especially cheap apartments. “