Real estate management company, Jones Lang LaSalle (JLL) Vietnam said in a new report that only 4,100 new apartments came into the Ho Chi Minh City market in the second quarter of 2019 and another 5,900 units in Hanoi. It cited stricter regulations, which require developers to secure all necessary documents and permits before they are allowed to sell units to consumers and investors.
In April, more than 100 real estate executives from the Ho Chi Minh City Real Estate Association (HOREA) met with city authorities to express dissatisfaction that it can take years to complete certain administrative and government procedures that are delaying projects.
At that meeting, Bui Xuan Huy, CEO of Novaland, said that many foreign and Vietnamese investors are eyeing opportunities in HCMC real estate, but that procedural delays are chasing them away since project delays increase costs for projects and create uncertainty about when projects will be approved.
According to JLL’s report, only 18,000 ~ 28,000 units are expected to come online in 2019, much lower than in previous years, while demand remains high, with the result that prices are skyrocketing.
A square meter in HCMC costs an average of $2,009 USD an increase of 21.6% from one-year earlier. The costs for top-tier apartments now cost $4,569, an increase of 52.9%, while mid-range apartment prices, where demand is highest, are between $1,200 ~ $2,000 per square meter.
In Hanoi, only 5,900 apartments, came into the market, demand too fell, with only 4,660 units being sold, down 65.3% from the first quarter. One of the key reasons for the lower demand was the rising rates of mortgage rates by banks that are taking a cautious approach to approving new property loans.