Vietnam’s property market is looking up, thanks to still healthy economic growth and an emerging middle class, which should provide more opportunities for Singapore developers, analysts say.
Developers from the Republic are already making headway in the country. Keppel Land, for instance, entered into a joint venture to develop a prime 14.6ha waterfront site in Ho Chi Minh City’s Thu Thiem New Urban Area this week.
Vietnam is bucking a broader regional trend of slower economic growth by posting 6.7 per cent economic growth last year.
In its inaugural market outlook report, property consultancy CBRE Vietnam said it expects “the macroeconomic environment to keep improving” this year, amid a steady flow of foreign investment into the country. It noted that confidence improved in the residential market last year, with 41,787 units launched for sale across all segments in Ho Chi Minh City, and 28,283 units in the capital Hanoi.
Sales of new condominiums in Ho Chi Minh City jumped 98 per cent against 2014, at 36,160 units; while 21,100 condos were sold in Hanoi, up 90 per cent from that a year earlier. CBRE Vietnam managing director Marc Townsend told The Straits Times the availability of credit has made home ownership more accessible to younger couples. “There’s been a fundamental change in the banking sector, now the banks have their own mortgage teams. The loan could be for 20 years, loan-to-value ratio of 70 per cent, and the starting rate would be about 6.5 to 7 per cent,” he added.
Real estate consultancy JLL Vietnam said property prices remained affordable there. Noted its country head Stephen Wyatt: “Overall prices are still down 15 to 20 per cent from their peak in 2007-2008. When compared to other major cities within the region, we believe there is considerable upside.”
A typical two-bedroom, 70 sq m apartment within a 15-minute drive of Ho Chi Minh City’s central business district would cost about US$1,600 (S$2,200) to US$2,000 per sq m, Mr Wyatt added.
Analysts say the relaxation of rules on foreign ownership of property last July could also help spur demand for homes. Over 1,000 units have reportedly been sold to foreigners since then, up from a “meagre 250 units in the previous five years”, Mr Wyatt said.
Singapore developers recognise the long-term growth potential of Vietnam’s property market.
“Vietnam is now CapitaLand’s third-largest market in South-east Asia and one of our fastest growing in the region,” CapitaLand Vietnam chief executive Chen Lian Pang told The Straits Times.
CapitaLand has eight residential projects in Ho Chi Minh City and Hanoi, totalling about 7,850 units, and it is “open to exploring investment opportunities in office or integrated developments”, Mr Chen added. Its serviced residence business, The Ascott, also has a portfolio of over 2,700 units in 16 properties across Vietnam.
CapitaLand was among the top- performing foreign developers in Vietnam last year, selling 1,321 units valued at $226.5 million, up 50 per cent from $151.5 million in 2014. Its best-selling projects include Vista Verde and The Vista, it said.
Keppel Land also received strong take-up for its latest condo development in Ho Chi Minh City, Estella Heights. It said 670 of the 872 units in phase one and two have been sold in under a year. Another project – Riviera Point Phase 1A – also in Ho Chi Minh City, is over 81 per cent sold.
Last year, Keppel Land sold 930 residential units in Vietnam, over five times more than in the previous year, the developer said.
“We are confident that we will continue to see healthy demand and plan to launch the next phase of Riviera Point in District 7 and South Rach Chiec in District 2 in 2016,” said Keppel Land president (Vietnam) Linson Lim.
South Rach Chiec is a waterfront development that will comprise over 6,000 homes and retail and commercial facilities.
In line with its strategy to further expand its commercial portfolio, Keppel Land said it has embarked on the development of Saigon Centre Phase Two, which will offer 40,000 sq m of Grade A office space, a seven-storey mall and about 200 units of luxury serviced apartments. It said the mall is fully committed and is due to open in the third quarter this year.
CBRE Vietnam said trade deals such as the Trans-Pacific Partnership, and Vietnam’s expanding manufacturing sector could further boost its economy and drive the real estate market in Vietnam.