Vietnam's real estate: significant increase in price index

Housing price index

In Hanoi, the housing price index increased by 3 percentage points to 134.9 points for the quarter. This figure has increased by 30% since hitting the bottom at 104.1 points in the third quarter of 2019. The net saleable area (NSA) has an average price of 41 million VND/m2, up 3% for the quarter. Additionally, limited primary supply, high market demand, infrastructure development, and improved quality have driven the increase in real estate prices.\

In the fourth quarter of 2023, the absorption rate of housing increased by 26%, up 15 percentage points for the quarter and 12 percentage points for the year. New supply accounted for 43% of the market share of sales volume and was absorbed at 46%. Large urban areas accounted for 61% of sales volume, reflecting continued demand for suburban areas. With consumer confidence improving amid a lack of alternative investment channels, housing demand is expected to recover. Furthermore, the amended Land Law will create conditions for the housing market to develop.

Meanwhile, in Ho Chi Minh City, the housing price index increased by 2 points to 126 points for the quarter. Secondary real estate prices stabilized in 12 districts and increased in 4 districts; however, they decreased by 1 point compared to the same period last year. Primary prices returned to the same level as in 2020, at 69 million VND/m2 NSA, after three Grade A projects suspended sales and reduced supply.

In the fourth quarter of 2023, the absorption rate improved by 14 percentage points for the quarter and 23 percentage points for the year to reach 40%. The improvement came from new products with reasonable selling prices ranging from 3 to 4 billion VND/unit, as well as completed legal procedures before launch and long-term payment plans. New supply accounted for 78% of total units sold for the quarter, with an absorption rate of 84%, reflecting high demand for products suitable for buyers' needs. Inventory items faced difficulties with modest absorption of 14%.

Office price index

In Hanoi, the office price index reached 69.8 points, down 0.7 points for the quarter and 1 point for the year. The occupancy rate for Grade B was 85% and Grade C was 92%, each segment decreasing by 1 percentage point for the year. Grade A maintained an occupancy rate of 85%.

In the central area, the office index reached 0.6 points for the quarter and decreased by 0.7 points for the year to 85.8 points, with rental prices decreasing by 0.3% for the quarter and 4.1% for the year, reaching 514,000 VND/m2/month. Occupancy rates remained stable for the quarter and increased by 3 percentage points for the year to 91.7%.

In the non-central area, the index decreased by 1 point for the quarter and 0.6 points for the year to 81.5 points, with occupancy rates decreasing by 2 percentage points for the year to 86.2%. Rental prices increased by 1.5% to 483,000 VND/m2/month.

In Ho Chi Minh City, in the fourth quarter of 2023, the office price index decreased by 1 percentage point for the quarter to 97 points and remained stable for the year.

The index in the CBD area decreased by 1 percentage point for the quarter and 3 percentage points for the year to 106 points, with occupancy rates decreasing by 1 percentage point for the quarter and 4 percentage points for the year to 91%, as new projects had lower occupancy rates at launch. However, rental prices increased by 2% for the quarter and 4% for the year to 980,000 VND/m2/month.

The index outside the CBD area decreased by 1 percentage point for the quarter and 2 percentage points for the year to 115 points. Despite a 10% increase for the year, rental prices still decreased by 1% for the quarter to 593,000 VND/m2/month after two Grade A projects offered discounts to attract tenants. The occupancy rate remained stable for the quarter at 88% but decreased by 2 percentage points for the year.

Source: Savills Vietnam, vietnambiz

Compiled by VBI