A REVIEW OF VIETNAM REAL ESTATE MARKET IN 2021 AND IMPACT OF NEW POLICIES ON LAND PROJECTS IN 2022

The report emphasizes that, in the fourth quarter of 2021, the market recorded no new supply in the affordable segment, while the mid-end segment was also increasingly limited from the second quarter of 2019.

There is no new supply in the affordable segment

According to a new report of VNDIRECT, the apartment market in Ho Chi Minh City. Ho Chi Minh City in the fourth quarter of 2021 recovered slightly, while the supply of new apartments in Hanoi decreased by 26.6% over the same period. Specifically, according to CBRE, the apartment market in Ho Chi Minh City in the fourth quarter of 2021 recovered slightly with new supply increasing by 5.5% year-on-year to 7,062 units, resulting in a 12.4% increase in transaction volume over the same period. period reached 5,683 units.

The high-end segment contributed mainly with 6,322 units, accounting for 89.5% of the total new supply in the fourth quarter of 2021. Therefore, the absorption rate in the fourth quarter of 2021 was relatively low at 80.5% (+4.9 percentage points over the same period). According to the report, there has not been any new supply in the affordable segment, while the mid-end segment has also become increasingly limited since the second quarter of 2019.

Review of primary and secondary markets in the fourth quarter of 2021

Prices of primary apartments in the city. Ho Chi Minh City increased slightly in all segments from 2.0 to 4.1% y/y in Q4/2021, except for the luxury segment (-3.0% y/y).

Some districts and districts recorded double-digit growth such as Thu Duc City (+21% over the same period), Nha Be (+19% over the same period) and Binh Chanh (+18% over the same period). by promoting infrastructure development. Prices of primary apartments in the city. Ho Chi Minh City recorded an average increase of 6.9% year-on-year to $2,306/m2 in the fourth quarter of 2021.

Regarding secondary land prices, according to VNDIRECTs research, land prices in the periphery recorded impressive double-digit growth such as Hoc Mon (+18.1% over the same period), Binh Chanh (+13, 8% over the same period), district 12 (+13.0% over the same period), because Metro line 2 is expected to start construction in 2022 and it is proposed to bring Hoc Mon, Binh Chanh, Nha Be, Cu Chi, Can Gio to the district. Meanwhile, VNDIRECT also recorded a slight increase in land prices throughout HCMC from 0.5%-8.2% y/y, excluding Phu Nhuan (-2.0% y/y).

VNDIRECT recorded a steady increase in the price of secondary apartments in Ho Chi Minh City by an average of +4.1% over the same period in the fourth quarter of 2021. Similar to the housing market, the price of apartments in the suburbs of the city. Ho Chi Minh City also increased strongly like Nha Be (+8.7% over the same period), Binh Chanh (+6.8 % over the same period).

In Hanoi, the supply of new apartments in the fourth quarter of 2021 decreased by 26.6% year-on-year to 5,328 units, resulting in a 33.4% decrease in transaction volume over the same period to 5,920 units. The market recorded 104 ultra-luxury apartments for sale with a positive occupancy rate of 69.2%, showing the potential of this segment in the coming years. The mid-end segment accounted for 86.3% of total new supply in the fourth quarter of 2021, so the absorption rate reached a high level of 111.1% (+8.7 percentage points over the same period).

According to VNDIRECT, the apartment market in Hanoi is set to a new price level, with a super luxury project in the center of Hanoi offering an average price of $25,000/m2.

Meanwhile, apartment prices in all segments also recorded a significant increase of 9.9%-15.6% over the same period, the highest growth rate in 5 years, of which the high-end segment increased the most in 15 years. .6% over the same period. Primary apartment prices in Hanoi increased by an average of 13.0% year-on-year to $1,596/m2 in the fourth quarter of 2021.

Secondary apartment prices in Hanoi increased by an average of 4.8% year-on-year in the fourth quarter of 2021. In which, selling prices in suburban areas continued to increase well such as Thanh Tri (+10.8% over the same period), Ha Dong (+8.1% over the same period).

Potential and risks of real estate market 2022

Regarding the market potential in 2022, VNDIRECT believes that new regulations promulgated in 2020 such as Decree 148, the revised Construction Law 2020 and the upcoming revised Land Law are expected to remove bottlenecks. in approving housing projects and shortening licensing time. The market will be active again after a gloomy and difficult period.

However, the report also points out four main risks. The first is a prolonged epidemic that could affect advertising and sales. Second, housing prices continue to rise rapidly, especially in suburban areas, raising concerns and may be beyond the capacity of homebuyers.

Third, construction costs may increase in 2021, especially steel prices have increased by more than 40%-45% over the same period. Steel accounts for 12-15% of total construction costs (according to industry experts estimates), which will push house prices up if material prices stay at their current high levels for the next two years.

Finally, the proposal to amend and supplement Point c, Clause 1, Article 75 of the Law on Investment has not been approved by the National Assembly in the first Extraordinary Session in early 2022. Accordingly, if the project does not have an area, Any area of ​​residential land will not be able to deploy commercial housing, causing hundreds of projects using agricultural and non-agricultural land to be delayed. VNDIRECT believes that this bottleneck may be prolonged until the 2013 Land Law is amended.