Some 6,000 apartments from 25 new projects came onto the Ho Chi Minh City market in the first half of 2010, according to Savills Vietnam. The figure shows that although the real estate market in general is encountering difficulties because of the slow recovery in Vietnam’s economy from the global economic crisis, the housing market is still speeding up to meet the demand in Vietnam’s biggest city. “The apartment market is still a major part of real estate in Ho Chi Minh City because of the rapid growth of the population and because their prices are more competitive than other housing types,” said Mr Truong An Duong, Deputy Manager of Savills Vietnam’s research department. “The total supply in both the primary and secondary market is 60,000 apartments. In a few years we estimate supply at around 100,000.”

At the end of May the GS Company from South Korea and CBRE Vietnam, the exclusive sales agent, were showing apartments at the Xi Riverview Palace, a luxurious apartment block in District 2, with Phase 1 having 180 apartments out of 270 in total. According to Mr Marc Townsend, Managing Director of CBRE Vietnam, the confidence of buyers has returned, with GDP growth in Quarter 1 of 11 per cent, back to 2008 levels, committed foreign direct investment (FDI) of $400 million being triple that of 2009’s Quarter 4, a slight trade surplus of $58.9 million and a noticeable increase in retail spending, by 22.6 per cent year-on-year. “The investment in Xi Riverview Palace was $100 million, located in the well-known high-end residential of An Phu and Thao Dien preferred by wealthy Vietnamese and expatriates,” said Mr Townsend. “It includes three towers, parking for 278 cars and 540 motorbikes, 270 fully-finished apartments and other facilities such as a library, a fitness centre, indoor golf, tennis courts, a pool, and a playground.” Apartments start at an average price of $2,185 per sq m.

Savills Vietnam is also offering luxurious apartments in Ho Chi Minh City, such as New Pearl in Nam Ky Khoi Nghi Street in District 1, at $4.800 per sq m (excluding tax), Saigon Luxury Apartments near Ben Thanh Market, at $4,300-5,100 per sq m (excluding tax), and Saigon Pearl on Nguyen Huu Canh Street, bordering District 1, at $2,100-2,600 per sq m (excluding tax). 

Allgreen, one of the largest real estate groups in Singapore, has also deployed its first apartment project in Vietnam: Regency Park in District 2, Ho Chi Minh City. According to Mr Andrew Choo, Managing Director of Allgreen, Regency Park is the first project from the cooperation between Allgreen and the An Phu Joint Stock Company. It has 515 apartments of 2, 3 and 4 bedrooms, including 12 penthouses of 4 and 5 bedrooms. The project has finished the basics and the investor plans to exhibit the apartments and sell them at the end of this year. CBRE will be the exclusive sales agent.

Luxurious apartments are a select market with not many buyers having the opportunity to own one. According to Mr An Duong, there are still local individual investors who are investing in Grade A apartments in strategic locations and hope that the value of the apartments will increase in the future and be rented to foreigners living and working in Vietnam. 

He also said the purchasing power in Ho Chi Minh City’s apartment market is becoming more active, particularly medium apartments at an average of $1,000 per sq m. “Eighty per cent of the 6,000 apartments in the opening months of 2010 are medium flats,” he said. The apartment market in Ho Chi Minh City is a market for final buyers; buyers who have a real need to reside have many choices in location, quality as well as price. Investors research carefully in developing types of apartments, especially local investors who now analyse more thoroughly to identify their main customer target so they can develop the most suitable apartment types. However, high interest rates and the amount of money needed to be borrowed from banks has been a barrier for purchasing power.”