The price of luxury real estate in Vietnam is still cheap in the eyes of foreign investors

Neil MacGregor, Managing Director of Savills Vietnam, said that the high-end and luxury housing market in Vietnam has a very long way to go before it can have dizzyingly high prices like Hong Kong and Singapore. The potential for this real estate segment is still huge.

According to this expert, Vietnamese luxury real estate prices are still cheap in the eyes of foreign investors. Accordingly, there are still great opportunities in the high-end and luxury real estate segment.

The record shows that, if the supply of high-end real estate is diverse, the line of luxury real estate, priced from tens of billions of dong to hundreds of billions of dong each, is quite scarce. This also creates a unique position for this product line. Purchasing power is still quite good in products that meet the "strict" criteria of the rich.

Priced from millions of USD per unit, The Mizuki villa product line of Nam Long Group's Mizuki Park Urban Area in the South of Ho Chi Minh City is now sold out, after a short period of time on the market. It is known that the time of sale, the price fluctuates depending on the type and location, ranging from 28-50 billion VND / garden villa, 38-48 billion VND / canal view villa, from 48-80 billion VND / villa river view villa.

In Ben Luc, Long An, this unit is also launching 96 Park Village villas with prices from 16.8 billion VND/unit, area 300-600m2. These villas are located in the 355ha Waterpoint urban area with modern facilities. Although it is only a "starting" market, this limited edition luxury real estate line has received quite good attention from the market.

In the near future, the product line of townhouses and villas of Nam Long Group's Izumi City urban area will also be introduced to the East Saigon area.

Previously, a number of riverside villas in an urban area in Thu Duc City, Ho Chi Minh City also had owners in a short time for sale. It is known that the price of each large apartment is up to 170 billion VND / unit, excluding VAT.

The Global City urban area

Same area, townhouses, villas The Global City by Masterise Homes priced at VND 40 billion/unit or more still receives the attention of wealthy buyers.

Once devoted to luxury real estate, Mr. Vo Huynh Tuan Kiet, Director of Housing CBRE Vietnam said: The bright spot of the real estate market in the long term is luxury real estate. This is a segment that will have less supply in the future. If in the past, the luxury product line was mainly located in prime locations in the central area, but now there is a tendency to move to large-scale urban areas with living views, lakes and canals. Rich people often spend money on this type because they care about health, feng shui, and life values.

“Scarcity coupled with distinctive features, luxury real estate hits right into the psychology of buyers with money who want to enjoy life. This is also a product line that has a strong price increase in the market," emphasized Mr. Kiet.

And Mr. Neil MacGregor emphasized, the high-end and luxury segments have been forecast to have an oversupply. However, in fact, in some projects, the supply does not meet the demand. In projects that launch "limited edition" products, they often excel in all criteria, so they are sought after by the super-rich. In which, a large amount of purchasing power comes from foreigners.

“There was a time when the purchasing power of foreigners in luxury apartment projects was at an unprecedented level, always with a 30% “room” allowed by the Government”, expert Savills emphasized.

Explaining the attraction and potential of this type of real estate, Mr. Neil MacGregor said that the number of rich and super-rich people in Vietnam is increasing rapidly, not to mention that more and more foreigners want to own real estate. here.

Meanwhile, the price of high-end and luxury real estate in Vietnam is still much cheaper than in regional cities such as Kuala Lumpur and Bangkok.

“The high-end housing market in Vietnam has to go a very long way to get dizzyingly high prices like Hong Kong and Singapore, so the potential for this real estate segment is still huge,” Mr. Neil MacGregor shared.

Mr. Neil MacGregor, Managing Director of Savills Vietnam.

In addition, the supply of luxury real estate is becoming scarce. This segment used to be very active in the Eastern districts such as District 2 (Thu Thiem, An Phu, Thanh My Loi) and Binh Thanh district but now very few products in this area are offered for sale. Currently, demand is shifting to neighboring provinces in the West and South of Ho Chi Minh City.

In fact, the number of luxury real estate properties in 2020 did not increase compared to 2018, 2019. In 2020 and 2021, the market continued to record a decrease in the offering supply due to the new licensing process and the revised licensing of new properties. Long project lead to slow project implementation. In addition, the Covid-19 epidemic has disrupted the birth of this segment. Entering 2022, the land fund continues to be scarce, somewhat hindering the development of luxury real estate. Because, according to experts, to develop this type, there are strict requirements on location, terrain, land fund and planning.

Meanwhile, according to CBRE Vietnam's secondary prices, luxury real estate prices still increase by 30-50% per year, despite the market's difficulties. Worth mentioning, the product line exclusively for the rich is difficult to discount.

Talking about the attraction of luxury real estate in the eyes of foreign investors, Mr. David Jackson, General Director of Colliers Vietnam said that the attractiveness of high-class and luxury real estate in Vietnam is that the price here is still much lower. many other major cities in the region. According to Mr. David Jackson, currently the average price per square meter of luxury apartments in the city center is only about 18% compared to apartments with similar locations in Singapore and Hong Kong (China).

Worth mentioning, the investment trend and taste of the rich in Vietnam also create attractiveness for this real estate segment. The rich and super-rich in Vietnam like to invest in real estate, considering real estate as the safest haven. Many foreign experts have also asked questions to talk about the heat of the real estate market: "If we don't invest in real estate in Vietnam, which country can we invest in?".

According to expert Savills, the price of luxury real estate in Vietnam is still cheap in the eyes of foreign investors.

Also emphasizing this issue, Mr. Neil MacGregor said that the domestic housing market is witnessing a huge demand and strong growth momentum coming from rapid urbanization with a golden population rate. However, there are still some major difficulties of the market such as legal procedures, land fund and investment capital, leading to a mismatch between supply and demand.

In a recent conference, this expert pointed out the main difficulties of the current real estate market as well as solutions.

Accordingly, he recommended that the competent authorities should come up with solutions to increase the clean land fund to avoid speculation and bubbles, solve the problem of housing shortage, and increase the supply for the market. At the same time, it is necessary to supplement the central area's land fund for housing project development and to deploy infrastructure projects to support the urban development process.

He also recommended to develop a more transparent public land auction process, which can invite foreign valuation units that have proven their international capabilities, and timely deploy infrastructure projects to support urban development process. In addition, authorities can refer to some public land auction processes in more mature markets such as Singapore, Hong Kong, etc.

In the context that real estate credit and corporate bond issuance are under strict control, Savills expert recommends that businesses actively diversify capital sources and approach alternative channels such as investment funds, M&A. , Venture. Diversifying capital sources will help stabilize the market and reduce systemic risks.

“The real estate industry continues to be an important part of the M&A landscape in 2022. Many of them are from Vietnamese investors, but there are also important transactions taking place between foreign parties. We are seeing a lot of interest from international investors despite the difficulties of the global economy in general,” emphasized Savills Vietnam expert.