Investors buy most of Vietnam’s high-end homes

By Dat Nguyen   December 2, 2018 | 08:43 pm PT
Investors buy most of Vietnam’s high-end homes
Investors occupy 65 percent of residence sales in Ho Chi Minh City. Photo by Shutterstock/Tonkinphotography
Investors buy a high percentage of high-end residence purchases in Vietnam, while occupiers take most of the low-end ones.

A recent report by real estate market research firm Savills Vietnam, Vietnam Residential Spotlight, says over 70 percent of grade A (high-end) residence buyers in Hanoi are investors.

The ratio in Ho Chi Minh City is just as high at 65 percent, says the report, which used data for the 2013-2017 period.

For the grade B (middle-end) segment in Hanoi, investors accounted for 40 percent of sales, occupiers, 55 percent, and the remaining 5 percent, speculators. The corresponding ratio in HCMC is 45 percent, 50 percent and 5 percent.

The data indicates that high-end and middle-end residences have become main interests of investors in recent years. They evince almost no interest in grade C (low-end) residences where occupiers make up 85-90 percent of transactions.

There has been a continuous downwards momentum in residential apartment supply between January and October this year, the Ho Chi Minh City Real Estate Association (HoREA) said in a recent report.

During this period, total housing supply in the Ho Chi Minh City market fell 39.2 percent. The biggest decrease in supply was in the low-priced apartment segment, which was down 68 percent, while that of high-end apartments fell 9.6 percent and mid-range went down 37.5 percent.

The association warned that the structure of real estate supply showed a serious disequilibrium in the market, with low priced apartments taking up only 19.3 percent of total supply while luxury apartments took up a third.

This showed a mismatch between demand and supply, posing a risk to sustainable development and social welfare, it said.

However, Savills forecasts that low-end residences will dominate HCMC’s supply in 2020 at 61 percent, while in Hanoi, the middle-end segment will lead the market, taking over half of the supply. At this time, Hanoi will have a higher high-end supply at 15 percent, compared to HCMC at 8 percent.

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