New supply boosts residential real estate profits hinh anh 1Illustrative image (Source: VNA)

Hanoi (VNA) - Residential real estate is one of the segments considered by Vietnam Report Joint Stock Company (Vietnam Report) as having strong growth potential in the property market. Accordingly, the new supply and the expectation of a high floor price will increase profit margins for real estate businesses.

According to Vietnam Report, both supply and demand factors have been on the rise, driven by low-interest rates.

About 3,500 new apartments were put on sale in Hanoi’s housing market in the first quarter of this year. Mid-priced apartments remained the most popular product in the market, accounting for 66 percent of the new supply in the period. Demand was higher than the new supply with 4,200 units being sold.

CBRE property consultant experts forecast 26,000-28,000 units will be offered this year and most of the new supply comes from urban areas.

As market sentiment remains positive, over 90 percent of the new supply will be sold and the primary price will increase at a more moderate rate of 5-8 percent this year.

Experts of Mirae Asset Vietnam Securities Company agreed, saying that the supply will significantly improve for the apartment segment this year.

The new housing supply in Ho Chi Minh City is expected to reach more than 20,000 units this year, mainly from the handover of existing projects. A series of projects in the suburbs of the city are planning to open for sale this year, creating the supply for the following years.

Analysts believed that the faster opening of new projects will boost corporate profits this year.

For example, Viet Capital Securities Company (VCSC) expects that Classia and Clarita projects will contribute about 90 percent of the profit forecast in 2022 for Khang Dien House Trading & Investment Joint Stock Company.

As for Nova Real Estate Investment Group Company, it plans to open for sale one new project in Dong Nai and two new hotel projects in the central coastal and Central Highlands regions this year and following stages. The expansion in the south and central regions will take place in the medium term while the investment in the northern market will occur in the long term.

In addition to new projects showing positive signs from supply in the near future, the fact that the real estate market has not shown any signs of cooling down can also contribute to increasing profit margins for businesses.

According to a survey by real estate website, in the first months of this year, the pricing level of many types of real estate has not shown any signs of stabilising even though it has simultaneously increased in 2021. The price of construction materials has continuously increased in a short time is also one of the factors contributing to the high price of real estate, even setting new floor prices in some segments.

The website’s data revealed that in January, apartment prices in Hanoi and HCM City increased by 4.6 percent and 1.8 percent, respectively compared to the average price for the whole year of 2021./.