15 - 7 - 2021
If it takes more than the third quarter to stamp out the COVID-19 epidemic, the market in the last 6 months of the year will not grow well because businesses are gradually exhausted. The limited income of the majority of people at this time makes the market situation not much volatile, most transactions will be mainly long-term investors.
Lack of supply, prices increase
The report on the residential real estate market in Ho Chi Minh City and its vicinity in the second quarter of 2021 by DKRA Vietnam Joint Stock Company showed that the COVID-19 pandemic broke out again for the 4th time leading localities across the country to apply social distancing measures, hence, the real estate market was only active in April and early May. Notably, there was a significant decrease in supply and consumption in the apartment segment.
For resort real estate, DKRA Vietnam recorded positive signals at the end of the first quarter and the beginning of the second quarter of 2021 with a strong increase in supply in the condotel, townhouse and beach shophouse segments. However, the evolution of the pandemic has greatly affected the recovery momentum of this segment.
In Ho Chi Minh City, with less new supply, the primary price level of all segments has increased. Specifically, the apartment market in Ho Chi Minh City and neighboring provinces recorded a slight decrease in supply and consumption compared to the first quarter of 2021, of which supply decreased by 28% and consumption decreased by 26%. Primary prices in Ho Chi Minh City in the first half of the second quarter increased by about 3-5%, considering the projects introduced to the market were mainly in the next stages, nearing completion or projects with synchronous planning.
The supply of apartments in the first 6 months of the year in Ho Chi Minh City had a sharp decline. Source: DKRA Vietnam.
Similarly, the new supply of townhouses and villas in Ho Chi Minh City had a sharp decline due to social distancing measures to prevent the 4th outbreak of COVID-19. The primary price level in the quarter had a modest increase in some projects, especially in Ho Chi Minh City due to limited supply while the secondary market did not observe changes.
Meanwhile, Mr. Su Ngoc Khuong, Senior Director of Savills Vietnam, commented that in the first half of the year, the southern market had almost only a few new projects in Ho Chi Minh City (mid-high-end and high-end segment) and other neighboring provinces such as Binh Duong, Dong Nai. Many projects are planned to launch this year, but due to the impact of the breakout, they have to adjust the implementation time. However, despite struggling with serious challenges under the pressure of the epidemic, this is only a short-term slowdown of the domestic real estate market.
According to Batdongsan.com.vn, in May 2021, in addition to the apartment segment, which attracts real-time buyers, other segments have not recorded much change, when most land plots and townhouses are all affected by COVID-19.
The supply and interest in land plots in Dong Nai are dominant in the first 6 months of 2021. Source: DKRA Vienam
The total number of listings for real estate sales in Ho Chi Minh City decreased by 7%, the number of customers interested in buying real estate decreased by 6% compared to April. In which, the number of advertisements for land plots decreased by 16%, the demand for buying and selling land decreased by 16%. This segment also decreased by 18% in just one month when the pandemic appeared. Project land plots dropped the most with 24% lower listings and 29% decrease in interest in projects.
Similarly, leaders of the Ministry of Construction said that the real estate market contains potential risks, therefore, it is necessary to actively monitor, closely follow the developments of the real estate market, and promptly propose solutions to ensure this market develop stably and sustainably.
Difficult to prosper at the end of the year
From now until the end of the year, Mr. Su Ngoc Khuong predicts that the real estate market will not have many breakthrough changes as the Vietnamese economy is still struggling to bear the damage caused by the epidemic. Besides, the limited income source of people during this time causes the situation not much volatile. The majority of trades will be mainly long-term investors.
Industry experts forecast most segments will maintain new supply at the level equivalent to the first 6 months of 2021, but apartment supply may increase slightly. In particular, the new supply of land plots is mainly concentrated in provinces adjacent to Ho Chi Minh City, where traffic infrastructure is being promoted, such as highways, airports. Some localities in the Mekong Delta with the advantage of transport infrastructure are completing and attracting real estate investment capital such as Ha Tien (Kien Giang), Can Tho, Hau Giang with land plots and townhouses which are suitable for investors, promising to create a highlight in the real estate market at the end of the year. But in general, demand can only recover in the last months of the year when the epidemic is under control.
The real estate market will gradually recover by the end of 2021 if three necessary factors are met: the Covid-19 epidemic is controlled nationwide, the vaccination rate reaches nearly 70%, and financial policies to support businesses are activated timely.
Mr. Mai Duc Toan, Director of Business Department - CNT Group commented, the first 6 months have passed quite heavily. Two consecutive and prolonged outbreaks upset all plans and intentions of real estate companies. However, from a positive perspective, this expert believes that the real estate market will gradually recover by the end of 2021 thanks to the great determination of the Government and people in the work of controlling and preventing the epidemic and efforts to restore production as quickly as possible by the business community.
"The market will partially recover in the middle of the third quarter and prosper again in the fourth quarter, if more than 50% of people are fully vaccinated, of which real estate companies have 100% of their employees vaccinated. The market in the last 6 months is likely to grow at least 25-30% compared to the first 6 months of the year. This ideal rate is expected to be achieved provided that real estate businesses accelerate as much as possible to compensate for the first half of the year".
Source: Cafef.vn