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CBRE Press Release Ho Chi Minh City Real Estate Market

Ho Chi Minh City (20 February 2019)

Shophouse in the podium of condominium building


In 2018, HCMC’s real estate market reported a significant decrease in new supply of ready-built townhouses and villas. At the same time, shophouses in the podium of condominium building (hereafter “shophouse”) were receiving great attention from investors. These properties are either sold freehold or leashold to investors who subsequently lease them commercially. The advantages of this product are limited supply, good location, high liquidity, high capital gain and flexibility (private business or leasing).


The southern area of HCMC (including District 7 and Nha Be District) has attracted and formed large domestic and foreign residential communities which always have high demand for shopping and food. In the past, some shophouse projects were deployed in the subdivisions of Phu My Hung New Urban Area (NUA) such as The Cresent, Canh Doi, Nam Vien, Van Hoa Giai Tri and Kenh Dao. Currently, District 7 (including Phu My Hung NUA) has 471 available shophouses located in the podium of condominium buildings which have an average rental price from US $22 to US $30 per sqm per month. The asking price of these shophouses is about US $4,000 per sqm. Particularly, the popular businesses of these shophouses are services, food & beverage, home décor and convenience stores with the involvement of many domestic and international brands like 7 Eleven, El Gaucho, Thea Clinic, Genshai, and Vinmart.


District 7, especially Phu My Hung NUA, is a mature market with a long-term development of shophouses in podium of condominium buildings. Nha Be District, with the area around Nguyen Huu Tho Street, is a new and potential market for this type of real estate property. The remarkable increase of high-rise condominium projects as well as low-rise houses built on Nguyen Huu Tho Street (part of the North-South arterial road of HCMC) has created new residential communities with high demand for shopping, foods and entertainment. Some available projects such as Phu Hoang Anh, Sunrise Riverside and Phu My Hung Saigon South Residence have shophouses in podium to meet the demand. The average asking prices of shophouses in some new condominium projects such as Sunrise Riverside and Phu My Hung Saigon South Residence are US $3,652 per sqm and US $2,767 per sqm, respectively. The Park Residence project has 90 shophouses (Central Point Shopping Plaza) with an intentional long-term lease in 2019. Average asking rent in the area is from US $10 to US $25 per sqm per month; some projects were quoted at US $15 to US $10 per sqm per month, like Phu Hoang Anh 1.





Serviced Apartment Market


The serviced apartment is a real estate product aimed mostly at tenants such as expats, long-term visitors and a small proportion of short-term tourists. The targeting of tenants plays an important role in utilities selection of a serviced apartment project. Serviced apartments usually have generous space with many utilities such as air conditioner, hot/cold water, kitchen, washing machine, working space and bedroom. These apartments are fully furnished and managed professionally with room cleaning and 24-hour dining services. In recent years, developers and landlords tended to focus heavily on customizing their products based on target tenants’ preferences. Tenants of the same country tend to naturally cluster. They often gather in the same project and the same building. As a result, there are several projects designed exclusively for expats from a particular area such as Japan, Korea, Russia and Europe.


This is also an attractive point of serviced apartment products; they offer community and unique value for expats working at FDI companies, embassies, industrial parks, international banks and other foreign enterprises in Vietnam.


Grade A serviced apartment projects are mainly located in large office building clusters, residential areas and shopping centers in District 1 and District 3. These Grade A projects usually offer a nice river view or a city view. However, new serviced apartment projects have recently been expanded to suburb areas such as District 2 (Thao Dien, a popular area for Western singles), District 7 (Phu My Hung New Urban Area with tenant focus on families from the Asia-Pacific region) and Tan Binh (close to the airport and convenient for crew members). District 2 and District 7 are now considered to be the two most hectic areas in Ho Chi Minh City with a lot of buy-to-let apartments.


Currently, Ho Chi Minh City has a total of 39 Grade A&B serviced apartment projects with more than 5,200 units and an average rent of USD 3 per sqm per month for Grade A apartments and USD 32 per sqm per month for Grade B.


Ho Chi Minh’s CBD area (District 1 and District 3) accounts for the highest percentage of total supply, most of which are Grade A projects. District 2 and District 7 take second place and third place, accounting for 12.0% and 21.0% of total supply, respectively. While the majority of large projects in District 7 are located in the Phu My Hung New Urban Area, projects in District 2 are scattered in the Thao Dien area, along the Hanoi Highway and Diamond Island.


In the southern area of Ho Chi Minh City, including District 4, District 7, District 8, Nha Be, Binh Chanh and Can Gio Districts, there are four serviced apartments projects from both Grade A and B with a total of 837 units.These projects are all located in District 7 and there are currently no projects developed in Districts 4, District 8, Nha Be and Binh Chanh Districts. In 2019, Nha Be is expected to have 60 serviced apartments from The Park Residence project. The average rent in District 7 is USD 34 per sqm per month, equivalent to USD 2,700 per unit per month. Serviced apartments in the south of Ho Chi Minh City have become more attractive, partly due to intense infrastructure investments and better transportation upgrades of the area. The occupancy rate in this area was over 80% in 2018. Rental demand in this area comes mainly from Japanese, Korean  and Singaporean  expats.


Although developers enjoy favorable conditions from this investment channel with high occupancy rates and annual increase in rental prices, there remains fierce competition from buy-to-let apartments. Therefore, providing quality and professional management services would be the success key for developers and landlords.




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