Landed property in Vietnam, despite recording the best performance ever in the second quarter of this year, is largely being overlooked.
According to real estate firm Savills’ Vietnam, who today released its latest research paper, reported the sector had the best performance ever with 820 sales in HCMC, or growth of 81 percent quarter-on-quarter (Q-o-Q) and 110 percent year-on-year (Y-o-Y).
This asset class has come of age, according to the firm, and now has critical supply mass, however will it match other asset classes for performance?
The Savills’ research explores the fundamental drivers of demand, and considers the investment future for landed property. Scenarios are explored and supported by open modelling.
The report highlights how smaller townhouse sizes have promoted affordability. Townhouses can compete with apartments, and are not that much more expensive yet offer far greater advantages such as recreational amenities, pool, education on-site, convenient shopping and the security of a gated community.
Historically a townhouse in HCMC was typically three times more costly than a high-end apartment; however this has now reduced to 1.7 times in newly developed areas.
This is a low-step ratio that shows landed property is well within reach for many.
Savills’ Vietnam forecasted that landed property demand in 2016 would be Y-o-Y 103 percet higher in HCMC and 88 percent higher in Hanoi. Strong demand indeed, but supported by a growing affluent class.
Compared to regional peers with similar population densities, such as Kuala Lumpur, Bangkok and Jakarta, HCMC and Hanoi’s primary supply of landed housing (less than 10 percent) is relatively small, leaving ample room for future growth.
“The local landed property market promotes sustainability due to a healthy purchaser structure,” said Troy Griffiths, Deputy Managing Director of Savills’ Vietnam.
“End-users account for the majority of purchasers, with speculators less than 10 percent. Investors are substantial in the townhouse segment, prompting an expanding rental market in the near future. Townhouses have outperformed other residential asset classes in investment returns thanks to land value appreciation and stable rental.” he continued.
The full report for Vietnam Landed Property, and other real estate reports from Savills’ Vietnam, can be found at www.savills.com.vn/research.