Luxury apartments more common than affordable housing in HCMC
1/15/20 4:38 PM
A high-end apartment project in Ho Chi Minh City. Photo by Shutterstock/Quang Praha.
Affordable apartments only accounted for 2 percent of housing supply in Ho Chi Minh City last year while luxury apartments made up 6 percent, CBRE says.
The property consultancy said in its latest report that the affordable housing segment saw no new projects coming into the market between March and December 2019, while the luxury segment had two, down from five in 2018.
"Although affordable apartments (under $1,000 per square meter) are the segment with huge demand, there has not been enough supply for several quarters," Duong Thuy Dung, senior director at CBRE Vietnam, said.
Profit margins in it are not as high as in the luxury segment ($4,000 per square meter upward), and so developers are not too keen, she explained.
With the sharp increase in housing prices in the last five years, the average price in the luxury segment had reached $6,308 in the fourth quarter of 2019, the report said.
Although prices are at a historical peak, over 70 percent of new luxury housing was sold last year, including 100 percent in the Thu Thiem New Urban Area in District 2, envisioned by the government as the city’s new business district.
Demand remains strong in this segment because luxury projects are located in prime locations, CBRE said.
More than two-thirds of CBRE's buyers last year were local, mostly aged 30-40 years and from HCM City, its neighboring provinces and Hanoi. Foreign buying was dominated by investors from South Korea, Taiwan, Singapore, and mainland China, the firm said.
Mid-priced apartments ($1,000-2,000) accounted for 67 percent of supply followed by high-end apartments (25 percent), defined as those costing $2,000-4,000).