Ho Chi Minh's high end apartment launches surge 130%

1,072 units were launched in Q2 as part of four notable new projects.

Vietnam has clearly overcome the limited supply market theme in 2020 with a markedly improved residential supply so far this year. 

According to JLL, new high-end apartment launches in 2Q21 totalled 1,072 units, an increase of 130% q-o-q, thanks to the launch of four notable projects. "Notably, Grand Marina, with the introduction of 243 units in the first phase, has become the first project to enter the ultra-luxury segment. New villa/townhouse launches totalled 173 units, mainly from small-scale townhouse projects in Tan Phu and District 12."

Here's more from JLL:

Positive demand and focus on new projects observed

Demand stayed strong with the market sales rate reaching up to 75% in 2Q21. New launches fared better with a sales rate of 93%, which dominated total absorption for 2Q21. Given a well-planned soft-launch campaign, the average sales velocity of new high-end apartment projects remained high, at around 100 units per quarter since the first soft-launch.

Due to limited supply, 2Q21 sales volume in the villa/townhouse sector totalled only 183 units, a 41% decrease q-o-q. Furthermore, the fourth outbreak prevented many buyers from conducting site visits, resulting in lower transactions recorded during 2Q21.

The rental market remains constrained

In 2Q21, net rents of buy-to-let high-end apartments stood at USD 8.32 per sqm per month, down -0.8% q-o-q and -15.6% y-o-y. The fourth COVID-19 outbreak in Ho Chi Minh City (HCMC) has weighed on the leasing market and further impacted rental performance.

Due to limited supply, high-end apartments continued their upward trend with impressive gains across the market. Especially, the official launch of the first ultra-luxury project – at more than USD 14,000 per sqm – increased primary prices significantly by 5.7% q-o-q. In the villa/townhouse sector, primary prices continued to record q-o-q growth of 4.1% due to the limited supply on the market.

Outlook: Fourth outbreak to dampen the expected new launches

Given the ongoing social distance guidelines under the fourth outbreak of COVID-19, the new supply in 2H21 will likely be constrained by anticipated closures or delayed launches. The total high-end apartment and villa/townhouse supply will be around 7,000 units and 1,500 units in 2H21, respectively.

Limited supply in the face of large demand encouraged developers to set the average selling price higher than ever before. Additionally, increased construction material costs resulting from supply chain disruptions during the pandemic are expected to drive up housing prices. Meanwhile, rents continue to be negatively impacted by the fourth outbreak across HCMC.

Note: Ho Chi Minh City Residential refers to Ho Chi Minh City's high-end apartment market.