HCMC new condo supply would reach 22,000 units (52% yoy) and 30,000 units (c.40% yoy) in 2022-2023F on its 2020-2021 low base.

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Recovery of new supply

Mr. Chu Duc Toan, senior analyst at VNDirect forecasted HCMC new condo supply would reach 22,000 units (52% yoy) and 30,000 units (c.40% yoy) in 2022-2023F on its 2020-2021 low base. "We expect HCMC new condo supply to decrease 20-30% yoy to 5,000-6,000 units in 2H22 (vs. 16,500 units launched in 1H22), sales volume to stay flat at 7,300 units supported by the remaining 4,000 unsold units in 1H22", said Mr. Chu Duc Toan.

The high-end segment is likely to dominate HCMC’s residential property market with a 60-80% contribution of total condo supply following the shrinking mid-end segment.

"We see condo primary prices in HCMC suburbs, namely Binh Chanh, Binh Tan are leveled at over US$2,000 psm following price hikes in these locations in the past two years. "In the context of tightening bank loans into the property sector and stricter supervision in corporate bond issuance, we expect developers to tame home prices to promote sales and improve cashflow," said Mr. Chu Duc Toan.

Low sales volume

Given the city's limit ed land bank and the slow pace of regulatory approval, HCMC's new ready-built housing supply is expected to shrink in 2H22F.The new supply is mostly from the suburbs of HCMC such as Thu Duc City, Dist. 12, Binh Chanh. Given the stricter supervision on credit into hoarding properties and tightening land management in hot areas, Mr. Chu Duc Toan expects land prices to slow down in Cu Chi, Hoc Mon and Binh Chanh in 2H22F; especially in Cu Chi after a sharp land price hike of 72.7% yoy in 1Q22.

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However, HCMC’s neighbouring provinces' ready-built housing markets remained optimistic in their 2H22F outlook.

According to DKRA, the 1H22 sales volume for the landed market in HCMC’s neighboring provinces decreased by 10.2% yoy to 1,526 units, while new supply fell by 49.8% yoy to 2,205 units. 1H22 take-up rate significantly expanded by 26.5% yoy to 60.2%. HCMC’s neighboring provinces, such as Long An and Dong Nai are poised to benefit from HCMC limit ed supply, along with acceleration in infrastructure development, shortening the time to HCMC, Mr. Chu Duc Toan remains optimistic about these provinces in the 2H22-2023F outlook.

Upcoming residential projects

Mr. Chu Duc Toan expected KDH would launch the Classia project with 176 townhouse/villa units in 4Q22 to relieve the shortage of HCMC new land supply. Notably, KDH has completed 80-90% of construction activities at the Classia project, Mr. Chu Duc Toan expects KDH will launch and hand over this project at the same time in 4Q22.

Besides, he said DXG would be likely to resume construction on the Gem Riverside project after 4 years put on hold due to a legal bottleneck. "We anticipate DXG will receive a construction permit and begin sales on this project in 2H22F, with over 3,000 high-end condo units," said Mr. Chu Duc Toan.