Scenarios charted to recover frozen HCM City real estate market

Hanoi (VNA) - Experts and businesses in Ho Chi Minh City’s real estate sector have mapped out recovery scenarios after the COVID-19 pandemic passes, with the local property market having experienced a marked slowdown.

The market was rather gloomy in the first quarter of the year and almost froze in March and the first half of April, according to Le Hoang Chau, President of the HCM City Real Estate Association (HoREA).

Only ten projects obtained approval to sell a total of 2,800 units during the first quarter, down 22 percent year-on-year and nearly 70 percent against the fourth quarter of 2019.

Most landlords in the city reduced rentals by between 10-30 percent during the period, according to Duong Thuy Dung, Director of Research and Consulting at CBRE Vietnam.

Only 175 land slots were put up for sale, down 74 percent compared with the fourth quarter of 2019 and the lowest number since 2015. Only 142 (81 percent) were sold, down 77 percent.

A similar picture was seen in neighbouring provinces such as Long An, Dong Nai, Binh Duong, and Ba Ria-Vung Tau.

Tranh Khanh Quang, Director General of the An Hoa Real Estate Investment JSC, blamed the stagnation on social distancing measures introduced to fight COVID-19, adding that his company has charted three future scenarios based on the development of the pandemic.

CBRE Vietnam also put forward two scenarios for HCM City’s apartment segment. If the pandemic was to be contained in June, there would be about 28,000 new apartments on offer, up 5 percent, with prices also up 5 percent. In its other scenario, if the pandemic was to pass in September, supply would stand at only 15,000, equivalent to 40 percent of the total in 2019, with prices down 5 percent.

Trang Bui, Senior Director of JLL Vietnam, pointed to a future when office space primarily serves jobs that require human interaction, and suggested enterprises set forth post-COVID-19 business strategies.

A representative from DKRA Vietnam said that supply of land slots would dry up as investors face financial pressures and become cautious. The apartment segment, however, may experience a slight increase in supply, of about 2,000-2,500 units, mostly in the eastern and southern parts of the city.

Su Ngoc Khuong, Senior Director of Savills Vietnam, said it will be a difficult time for many domestic and foreign investors but huge opportunities exist for individuals and businesses that have strong financial capacity and experience, especially in purchases and transfers.

Other experts suggested banks offer incentives to help vulnerable firms maintain their operations and recover once the pandemic ends.

HoREA also proposed the Government extend land use tax payments from March to June and for individuals and households for 12 months.

Ho Chi Minh City is the largest city in Vietnam and the economic hub of the southern region. Accounting for 0.6 percent of Vietnam’s total land area and about 9 percent of the country’s population, it is part of the southern key economic zone, which also comprises Dong Nai, Ba Ria - Vung Tau, Binh Duong, Long An, Tay Ninh and Binh Phuoc provinces. In the southern economic hub, over 3,000 projects across all sectors are supported by foreign capital, while the number of registered enterprises has exceeded 100,000.