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There was a sharp decrease in apartment sales compared to the last quarter, with transactions shrinking 35 percent. Net absorption went down by 17 percent on-year and nine percent from the last quarter to 16 percent, according to the quarterly report for the Ho Chi Minh City market recently released by CBRE Vietnam.
The mid-end segment accounted for the majority of sales at about 41 percent, followed by high-end apartments with 22 percent, mainly from the Vinhomes Golden River development.
New apartment projects are struggling with demand down in Ho Chi Minh City. Photo from basonvinhomes.com
Premium apartment sales are falling, but investors are adopting a "wait-and-see" philosophy. This riverfront project reported positive business results for mid-end apartments, with total sales equivalent to eight years of luxury apartment transactions.
This has led to fears that the sales volume may not catch up with new developments. Moreover, CBRE Vietnam reported a noticeable shift from end-users to investors in the last 12 months.
The second concern and risk to buyers comes from recent legal disputes between residents and project investors who use their units as collateral, hand over of unfinished building and disputes between land owners and project investors.
However, the spotlight is on the mid-end segment that accounted for 37 percent of total sales in Ho Chi Minh City during Q2.
Evaluating the slack market, most investors have lowered offering prices to $2,009 per square meter, falling 0.3 percent compared to the last quarter, but in the luxury segment, prices are two percent higher mainly due to Vinhomes Golden River.
Director of Research and Consulting at CBRE Duong Thi Thuy Dung forecast that: “The apartment market could be more positive in the second half of 2016 when investors plan to launch new projects, including the second phase of the Diamond Island Premier Residence invested by Kusto Home; Empire City invested by Tien Phuoc, Keppel land, Gaw Capital and Tran Thai; Millennium invested by Vinh Hoi Investment JSC, Phat Dat and Thao Dien Investment JSC (District 4); and Sunwah Pearl (Binh Thanh District)."
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