Phnom Penh condo prices drop while Ho Chi Minh City’s rise

Phnom Penh condo prices drop while Ho Chi Minh City’s rise

Phnom Penh condo prices Condominium prices are rising in Vietnam’s biggest city despite rising Coronavirus deaths and a city-wide lockdown. In the world’s most vaccinated city per capita, Phnom Penh, condo prices look set to continue falling because locals lack the spending power of their Vietnamese neighbours.

Phnom Penh condo prices

Despite he pandemic impacting Vietnam’s resort, hotel and rental market, the housing and apartment segment still has projects for sale at record prices.

The real estate market report for the second quarter of this year from the Ministry of Construction showed that Hanoi and Ho Chi Minh City have projects in central locations at very high prices.

Accordingly, in Ho Chi Minh City, the One Central Saigon project has an expected selling price of about 650-800 million dong ($29-35,000) per sqm; while the Spirit Of Saigon project in District 1 is priced at 400 million dong per sqm.

In Ho Chih Minh City (HCMC), which is home to 3.4 million people,  prices rose by 9 percent last month, compared with a year earlier, according to local listing website Batdongsan.com

Multi-million dollar apartments up for sale in Vietnam

HCMC has been locked down for more than 100 days with residents ordered to stay home unless absolutely necessary. A maximum of two people are allowed to meet in public. In spite of the lockdown, the city’s fatality rate from Covid-19 was 3.69 percent on Saturday, compared with a national death rate of 2.49 percent and Cambodia’s 2.59 percent national fatality rate. The figures were compiled by Our World in Data and Nikkei Asia.

In Hanoi, The Grand Hang Bai project – at 22-24 Hang Bai, Hai Ba Trung district – has an offering price of 570-700 million dong per sqm. An apartment measuring 120sqm costs up to 84 billion dong.

The project also had a record price for site clearance compensation, with up to 500 million dong per sqm.

It set a new record for apartment prices in Hanoi. Earlier, the apartment renovation project at 30 Ly Thuong Kiet Street had commercial apartments offered for sale at 300 million dong per sqm.

The head of a real estate firm was quoted by online newspaper vov.vn as saying that customers in the luxury segment would not be financially affected by the pandemic. Therefore, such projects have good liquidity when buyers want to transfer large amounts of money into fixed assets.

Batdongsan says the reason for the rise  in HCMC apartment prices is tight demand even as fewer people shop online for homes. Condo searches on its website fell 23 percent last month compared with August 2020.

Batdongsan Regional Director Dinh Minh Tuan is still optimistic that sales will rise when Delta cases drop.

“Despite the economic difficulties caused by the Covid-19 epidemic, the demand for housing is still high. The more the epidemic, the more people want to own a safe, private home,”  Dinh said.

In addition to multi-million-dollar apartments, Hanoi’s real estate market is also bustling with sales of houses, especially in the Old Quarter area and around Hoan Kiem Lake.

On streets like Hang Bong, Hang Bac and Dinh Liet, the number of listings increased sharply with prices of 800 million to 1.1 billion dong per sqm. There are houses on Hang Bong Street sale at a price of nearly 1.8 billion dong per sqm.

Nguyen Van Dung, a real estate broker in Hoan Kiem district, told the newspaper that in the Old Quarter, most customers buy property to build hotels or shops for foreign tourists. The rental price in the area could be up to 200-300 million dong a month. However, in the past two years, with four waves of the Covid-19 pandemic, the rental price has decreased by 30-50 per cent, and there are still no tenants.

“In recent months, due to social distancing, cash did not directly flow into real estate but focused on securities. However, the phenomenon of selling off real estate has not occurred especially in areas adjacent to Ho Chi Minh City. This shows that many investors still keep their money and wait for opportunities to buy real estate after the pandemic,” he said.

In Cambodia’s capital, home to 2.1 million people, prices are not reaching the heights of its Vietnamese  neighbour. Few locals and expats are testing the real estate waters even though Phnom Penh is the most vaccinated capital city in the world per capita. Around 99 percent of adults have received two jabs and some have been given a booster of a different vaccine.

Due to difficulties in business, shops and hotels in the area have closed. Many people wanted to sell property to change their investments. However, the number of transactions in the area is low because it is difficult to sell large properties at this time, according to Dung.

Vietnam Estate Brokers Association secretary-general Nguyen Van Dinh said real estate in the Old Quarter had been popular for centuries, with convenient transport and social infrastructure as well as services. Its value therefore is immeasurable. Before the pandemic, there was very little supply in the Old Quarter.

The Covid-19 pandemic has severely affected the real estate market. If Vietnam could control the pandemic soon, the market would recover in the fourth quarter of 2021. Housing prices after the pandemic would remain stable but may not increase much due to rising input materials prices. It would be difficult for transactions because the cash flow has become exhausted after two years of the pandemic, he added.

The managing director of estate agency CBRE Cambodia says one reason for rising prices in HCMC is that locals have more to spend than Phnom Penh buyers.

“In Vietnam, the domestic audience for real estate investments has been growing rapidly, whereas in Cambodia, while the domestic market is growing, it still remains small, especially for high-rise residential,” James Hodge said.

Vo Thi Khanh Trang, deputy director of Savills Vietnam’s Research Department, said because of new supply and low inventory, transaction volume was also low in the first six months of the year. However, the selling prices of apartments, townhouses and villas tended to increase.

With the expectation that the pandemic would be controlled throughout the country in the third quarter of 2021, along with vaccination campaigns that were also being widely and quickly deployed, the market would have projects for sale in the last months of the year and the beginning of 2022.

However, the level would not be high, and might recover in a more sustainable way. Real estate prices were forecast to still increase because Vietnamese people prioritise land-based housing, she said.

“The purchasing power of the average Vietnamese buyer is larger than in Cambodia, meaning that a broader proportion of the population can afford to invest in real estate. In addition, Vietnam’s economic performance remains strong and their real estate market is more developed. These factors act to hold up demand from foreign buyers, whereas in Cambodia we are at an earlier stage of economic and real estate market development,” he said.

Phnom Penh’s high-end condominium prices fell 9.1 percent in the second quarter, according to a CBRE survey. Affordable condo prices were down by 4.9 percent. CBRE doesn’t break out monthly price moves. It will release its July to September survey next month.

Author: Cherslim