24/05/2022
RESIDENTIAL REAL ESTATE MARKET IN VIETNAM - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECAST (2022 - 2027)
The Vietnamese Residential Real Estate Market is Segmented by Type (Villas and Landed Houses, Condominiums, and Apartments) and City (Ho Chi Minh City, Hanoi, Danang, Quang Ninh, and the Rest of Vietnam). The report offers market size and forecasts for the Vietnamese Residential Real Estate Market in Value (USD Billion) for all the above segments.
Pic 1 ( Market Snapshot )
Market Overview
Residential real estate in Vietnam is expected to witness a CAGR of more than 15% in the forecast period.
The impact of COVID-19 and other factors slowed down the activity of the real estate market in most provinces and cities across Vietnam. The situation of few projects being approved and the supply scarcity has become quite common in the nation. In the first half of 2020, the residential real estate market was almost paralyzed by social distancing to fight the pandemic, projects were halted, and the real estate exchange was temporarily closed.
Vietnamese population in 2020 was 97.33 million and is expected to reach 120 million by 2050. The country is experiencing rapid demographic and social change, which is anticipated to support the effective demand for the residential real estate industry in the coming years. According to IMF’s October 2021 forecast, Vietnam’s gross domestic product (GDP) growth is projected to grow significantly from USD 343.1 billion in 2020 to a whopping USD 630.5 billion by 2026.
Vietnam, across various sectors, including construction and real estate, is rising with great potential among the Southeast Asian economies and is expected to continue its stellar growth in the coming years. The outlook for the Vietnamese residential real estate market is positive mainly due to continued strong economic growth, rapid urbanization growth, and the construction of several mega projects in major cities such as Ho Chi Minh and Hanoi.
The rising internet pe*******on and increase in disposable income by the middle-class youth population in Vietnam have surged the demand and sales proportion of residential real estate through online channels. This quick surge in individual wealth has made property affordable for many Vietnamese people, contributing to an increase in new developments and an increase in property prices. The residential market focus has now shifted from the high-end to the mid-value segments, as urbanization has created an ongoing demand for housing in large urban centers. Furthermore, the country is now widely seen as the luxury real estate market hotspot, with a growing economy coupled with laws that have made it easier for foreigners to purchase the property.
The government is also supporting affordable housing for the low-income group, which is anticipated to promote the residential real estate business in the nation. In the second quarter of 2021, the Ministry of Construction reported that Ho Chi Minh City currently had two affordable apartment projects, the East Gate project and the Tecco Town project. The Tecco Town project in Binh Tan District costs about VND 24 million (~USD 1,050) per square meter and the East Gate in Thu Duc City costs about VND27 million (~USD 1,180) per square meter.
Scope of the Report
Residential real estate is broadly defined as real property (land and any buildings on it) used for residential purposes. The Vietnam Residential Real Estate Market is Segmented by Type (Villas and Landed Houses, Condominiums, and Apartments) and City (Ho Chi Minh City, Hanoi, Danang, Quang Ninh, and the Rest of Vietnam). The report offers market size and forecasts for the Vietnamese residential real estate market in Value (USD Billion) for all the above segments.
Key Market Trends
Rising Government Initiatives and Social Housing Development Policies
The national assembly and the Government of Vietnam propagated many policies and mechanisms to develop social housing to support disadvantaged and low-income people in both urban and rural areas. The key initiatives of the Vietnamese government include the law on housing 2014 and other official directives to provide support and incentive for the development and management of social housing, including openness for investment by foreign individuals and organizations in social housing development.
HCMC council implemented projects to increase the sources of clean land in urban and sub-urban areas and retrieved about 200 hectares (initially in 2008) of the area from the inner city to the suburban. The expansion of the availability of clean land is likely to increase the radius of social housing from the central area.
The Establishment of the 2021-2030 comprehensive social housing policy in Vietnam project, which was launched in 2018 under the non-refundable aid from the Korean International Cooperation Agency (KOICA), is aimed to complete the regulatory framework for the affordable housing segment that is in high demand in the lower-middle-income country.
According to the Ministry of Construction, about 250 affordable housing projects adding 5.4 million square meters for the low-income group in urban areas and workers at industrial parks have been completed, delivering around 104,000 apartments.
Pic 2 ( GDP contribtution of real estate in Viet Nam 2015-2021 )
Rapid Urbanization is Supplementing Housing Demand
The extensive development of cities, attracting more population movement from small towns to large cities, increased the demand for residential products. According to World Bank statistics, the urban population in Vietnam was 31.1% in 2011, and it reached 37.3% in 2020.
The annual urban population rise was 2.8% in 2020 (World Bank, 2021), coupled with the upsurge in the migration of the population from rural to urban areas. This is likely to propel the demand for residential or housing products and the market during the forecast period. According to the General Statistics Office of Vietnam, the annual flow of migrants from rural to urban was around 27.5% in 2019, which is expected to encourage the industrial growth and development of the construction and real estate sector across Vietnam.
Pic 3 ( Urbanization in Viet Nam, 2011-2020)
Competitive Landscape
The Vietnamese residential real estate market is fragmented due to the presence of many local and global players in the market. Vietnam residential real estate includes pure Vietnamese capital-based local companies, foreign investment funds which are foreign companies, and joint venture firms.
Various proptech startups and traditional real estate firms are aiming to leverage technology to improve their operations and competitive edge by providing effective solutions to enhance home buying, selling, renting, and living experiences in Vietnam.
Key players in the residential real estate market include Novaland Group, Dat Xanh Group, FLC Group, Hung Thinh Real Estate Business Investment Corporation, and Danh Khoi Holdings.
Recent Development
In September 2021, following the completion of the M&A deal, Danh Khoi completed the formalities to officially own the 3-frontage diamond landbank at the intersection of Bach Dang, Tran Van Tru, and Binh Minh 5 streets. On the so-called billion-dollar axis of trade culture-tourism in the center of Da Nang City, Danh Khoi will develop the first Branded Residence project in the heart of Central.
