Scarcity of New Projects in Ho Chi Minh City: Causes and Prospects

The real estate market in Ho Chi Minh City is currently experiencing a shortage of newly launched projects. According to reports from CBRE and the Ministry of Construction, the number of new projects in Ho Chi Minh City remains limited in 2024, despite positive signs of market demand. Legal and financial difficulties are causing many projects to stall, with only financially strong and reputable investors able to continue.

1. Limited Supply, Slow Improvement

According to CBRE's report for Q3/2024, only 127 new apartments were launched in Ho Chi Minh City, primarily from subsequent phases of older projects located in districts far from the city center. Additionally, approximately 300 apartments that had been paused due to legal issues in recent years in Thu Duc City and District 7 have been reintroduced to the market, along with about 2,700 units that have not yet been officially launched but are starting to accept reservations.

Although market demand is gradually picking up, the supply of apartments in Ho Chi Minh City shows no clear signs of improvement. This reflects the legal difficulties that investors face. By the end of Q3, a few projects with legal obstacles in Binh Thanh and Thu Duc had resumed, with plans to officially launch sales in 2025. While this is a positive sign, it is not enough to fully resolve the supply shortage.

2. Legal Obstacles - The Main Cause of New Project Shortages

According to the Ho Chi Minh City Real Estate Association (HoREA), 148 projects in Ho Chi Minh City are facing legal issues at three levels. First, unresolved legal regulations. Second, challenges stemming from sub-legal documents, particularly the valuation of land using the residual method, which has prevented many developers from fulfilling their financial obligations to the state, affecting buyers' rights. Lastly, inconsistencies in legal provisions have made project execution difficult.

In fact, over the past three years, the number of newly licensed projects in Ho Chi Minh City has dropped significantly. In Q2/2024, the entire southern region only had one licensed project, far below the nine projects each in the northern and central regions. This has forced many investors and buyers to turn to older projects or secondary markets for property.

3. Legal Clarity - A Key Factor for Buyers

According to a report by Savills Vietnam, current demand is primarily focused on projects with clear legal standing and reputable developers. One of the rare newly launched projects in the southern part of Ho Chi Minh City is Essensia Sky, which has attracted attention from many investors and genuine homebuyers. After obtaining a construction permit and officially starting in September 2024, the project is progressing rapidly, aiming for completion in 2026, providing 424 green and health-standard apartments.

Essensia Sky is part of the Dragon City urban area, developed by Phu Long, a well-known developer with extensive experience in urban development across Vietnam. Phu Long’s reputation ensures buyers' peace of mind regarding legal clarity and construction progress.

4. Location and Infrastructure - Key Advantages of New Projects

Essensia Sky is located on Nguyen Huu Tho Road, a vital segment of the North-South transportation axis in Ho Chi Minh City. This strategic location allows convenient access to Districts 1, 4, and 7. The project is also close to industrial zones and external amenities such as schools, hospitals, and shopping centers.

With the ongoing improvement of southern Ho Chi Minh City’s infrastructure, such as the recently opened Nguyen Van Linh - Nguyen Huu Tho underpass and the upcoming Metro Line 4, Essensia Sky is expected to attract more investors and buyers due to its prime location and developing infrastructure.

5. Market Outlook for Ho Chi Minh City

In the context of limited supply and a shortage of newly launched projects, those with clear legal standing, reputable developers, and advantageous locations like Essensia Sky will attract strong demand. This not only helps increase project liquidity but also contributes to improving the real estate market situation in Ho Chi Minh City.

However, to achieve sustainable market development and ensure sufficient supply to meet demand, more proactive support is needed from government authorities to resolve legal issues. Only when these issues are thoroughly addressed will the Ho Chi Minh City real estate market return to stable growth.

6. Strategies to Overcome Supply Shortages

In the face of supply shortages, investors must seek suitable strategies to maintain growth. For smaller investors, turning to suburban areas offers a solution, where real estate prices remain more reasonable and legal processes are less complicated. Areas like Binh Chanh, Nha Be, and Cu Chi in the southern region, or Hoc Mon and Cu Chi in the western outskirts, have become new hotspots for investors.

For larger investors with strong financial resources, expanding portfolios into other sectors like industrial, commercial, and office leasing is being considered as a new direction. Lessons from other countries show that diversification helps reduce risk and increase business sustainability.

7. Expectations for Policy Improvements and Government Support

To address the shortage of new projects, the role of government agencies in improving legal policies is crucial. Simplifying licensing procedures, streamlining investment processes, and ensuring legal consistency should be prioritized.

Additionally, financial support programs, such as lowering interest rates for potential projects, will give investors better conditions to accelerate construction progress. This will not only increase supply but also create an important driving force for the sustainable development of the Ho Chi Minh City real estate market.