Preparing For A Prosperous Future

The real estate market is expected to recover from 2022

In 2021, a total of 14,339 units (-22% YoY) were launched, while 14,639 units (-7% YoY) were sold in Ho Chi Minh City (HCMC) property market. The reason for the decrease came from the negative impact of the pandemic. All segments witnessed positive price growths. The average primary price was US$2,306 psm (+7% YoY).

In 2021, the total new launch was 16,758 units (-7% YoY) in Hanoi real estate market. The new launch units mainly came from township developments in the East and West of Hanoi. Meanwhile, around 16,958 units were sold in 2021 (-9% YoY). The primary prices of apartments for sale in Hanoi averaged US$1,596 psm (+13% YoY) thanks to the higher proportion of high-end projects in the total new launch. 

We expected the sold units could reach over 90% high of total new units launched, and primary prices may increase at a relative moderate rate of 5-8% during 2022 in both cities. More mid-end products will be available in Hanoi, while high-end products will also be introduced at new and emerging locations besides at prime, established ones. Meanwhile, the price growth of HCM’s primary supply is anticipated to be slightly lower than last year’s due to an increasing volume of high-end projects to be launched in suburban areas.


Real housing demand comes from the high urban population rate and the urbanization process

In May 2022, the Vietnamese population reached 98.8 million, up by 12.5 million people compared to 2009. That jump makes Vietnam the 15th most populous country globally and the third in Southeast Asia. The estimated growth rate of Vietnam’s population could be about 1% per year, corresponding to an average of about 1 million people per year. In addition, Vietnam is still experiencing a period of “golden population structure,” which is forecast to last until 2040. The working force aged 25 to 44 accounted for 32.9% of the population. It will boost the real demand for housing.

Besides, lifestyle changes, especially for the younger generation. They reduce the household size and increase the number of single households. Therefore, we forecast housing demand to continue to grow.

According to CBRE, Vietnam’s urbanization rate is expected to reach 40-45% by 2025, with around 240,000 new households each year. Therefore, the annual housing demand in the country’s two biggest cities, Hanoi and Ho Chi Minh City.


Infrastructure development laid the foundation for the real estate market to thrive

After the covid-19 pandemic is under control, we realize that the government is focusing on accelerating infrastructure improvement and public investment. Specifically, according to the total public investment capital plan in 2022, there will be more than VND 584 trillion disbursed, which belongs to the VND 2,870 trillion medium and long-term strategy of public investment in the 2021-2025 period. We expected that the visible and meaningful progress on infrastructure developments help boost real estate capital values and increase project connectivity.

The plan for the development of periphery infrastructure in (1) HCMC Ring Road 3, 4, HCMC-Moc Bai highway, Bien Hoa – Vung Tau highway, and (2) Hanoi has worked such as Ring Road 4, the Metro line No. 2A and No. 3, and the Red River subdivision planning. Along with urban population growth, infrastructure development will spur supply and demand from downtown areas of Ho Chi Minh City and Hanoi to suburban areas and satellite provinces in the suburbs.


Remove the legal “bottlenecks”

From 2022, we expect the legal ‘bottlenecks’ to be removed step by step. Therefore, the real estate market in Vietnam is on the road to recovery and development in the future.

(1) Decree 148/2020/NĐ-CP: Solving problems with land areas managed by the State and housing projects with a mixed land band.

(2) Construction Law Amendment 2020: Omitting some processes, simplifying administrative procedures, and shortening the time for obtaining construction permits.

(3) Circular 21/2019/TT-BXD: Bringing opportunities for affordable home buyers.

We believe that the bond market still plays an important role in the capital mobilization channel of enterprises and the economy in the long term. Therefore, the legal improvement of the corporate bond issuance process will make it more controlled and more professional. In addition, listed companies will have more advantages in issuing bonds thanks to transparent information than unlisted companies.

We expect that the real estate industry will witness sustainable growth. Besides, we also expect businesses to have clean and large land banks, the excellent ability to implement projects, and a healthy financial structure will be potential “leaders.”