Vietnam's real estate market in the second quarter is forecast to recover unevenly

Regarding the Vietnamese real estate market in the second quarter of 2024, according to the forecast of the Economic, Financial and Real Estate Research Institute of Dat Xanh Services (DXS - FERI), although the market faces many challenges and the recovery of various parts is uneven, overall, the Vietnamese real estate market is experiencing a recession. After passing the most difficult period, more positive trends began to show. All property types are seeing improvements in new sources of supply.

In terms of office building rentals, the supply in Hanoi is expected to reach 2.15 million square meters, a quarter-on-quarter increase of 2%; the supply in Ho Chi Minh City is expected to reach 2.7 million square meters, a quarter-on-quarter increase of 4%. Rental prices in Hanoi are expected to remain stable at US$21.5 per square meter; average rents in Ho Chi Minh City are expected to increase by 5% to US$34 per square meter. The average rental rate in both places increased slightly, reaching 86% in the Hanoi market (a quarterly increase of 1 percentage point) and 91% in the Ho Chi Minh market (a quarterly increase of 1 percentage point).

In terms of retail space, supply in Hanoi remains at 1.8 million square meters, while supply in Ho Chi Minh City is expected to increase to 1.53 million square meters, a quarterly increase of 3%. Rents in both places remained stable at US$46 per square meter in Hanoi and US$53 per square meter in Ho Chi Minh City. The average rental rate in Hanoi was 86% (up 1 percentage point quarter-to-quarter), and in Ho Chi Minh City it was 90%.

Industrial real estate also shows a steady growth trend. The northern region is expected to add 15,000 hectares, a quarterly increase of 3%; the southern region is expected to add 27,900 hectares, a quarterly increase of 1%. New leasing demand will come from the recovery of the manufacturing industry, increased export orders and the entry of many foreign-funded enterprises. Rental rates were stable in the north and increased slightly (about 1 percentage point) in the south. Rental prices remain competitive in the regional market.

It is worth noting that new supply of residential real estate in the second quarter of 2024 is expected to increase by 25% compared to the first quarter of 2024, mainly from projects that have started sales or have started construction in the previous stage. The estimated supply of new products (only counting items already planned for sale) is approximately 4,500 products, bringing the cumulative market supply to 45,200 products.

Experts at DXS-FERI believe that the real estate market is showing multiple positive signals and assess that the market is recovering from a U-shaped bottom. However, how quickly the market recovers will depend on the impact of macro and micro factors.

Possible scenarios forecast for the second quarter of 2024 (residential real estate segment) include the ideal scenario, expected scenario and challenge scenario. In an ideal scenario, new supply increases by 30%-40%, floating interest rates are 8%-10%, sales prices increase by 10%-20%, and absorption rates reach 40%-50%. In the expected scenario, new supply increases by 20%-30%, floating interest rates are 9%-11%, sales prices slightly increase by 3%-5%, and the absorption rate reaches 30%-35%. In the challenge scenario, new supply increases by 10%-20%, floating interest rates are 10%-12%, sales prices are flat, and absorption rates reach 25%-30%.

Based on market analysis data up to March 31, 2024, DXS-FERI experts prefer the expected scenario. Specifically, new supply in the real estate market in the second quarter of 2024 is expected to increase by 20%-30%, sales prices will increase slightly by 3%-5%, and the overall absorption rate will reach 30%-35%.

For more information about real estate projects in Ho Chi Minh City and neighboring provinces, please contact FTT LAND!

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