Photo: Viet Tuan
JLL report predicts momentum achieved in 2016 will continue into 2017.
JLL Vietnam has reported that the real estate markets in both Ho Chi Minh City and Hanoi had a very strong 2016, with multiple new highs recorded in all facets of the residential market.
Total new launches of apartments in the two major cities reached more than 70,000 units during the year, with more than 67,000 sold; a significant improvement over the last few years. In line with positive sentiment in both demand and supply, prices remained on the uptrend across all the markets.
“In 2017 it is likely that the momentum will continue and the residential market will move into a more sustainable mode, with the expansion of lower-end segments and improvements in owner-occupier demand versus investor demand,” said Mr. Stephen Wyatt, General Director of JLL Vietnam. “Prices will grow further.”
Its report said that GDP growth in 2016 was lower than in 2015 and the government’s annual target, but given the negative impact of harsh climatic conditions, environmental disasters, and volatile geopolitics throughout the year, the result was considered positive. Strong increases in FDI, retail sales, and the number of international tourists, coupled with improvements in the manufacturing and service sectors, resulted in a healthier shift in the country’s economic structure.
For 2017, both the government’s annual target and the World Bank’s forecast are more positive than actual 2016 results and are based on expectations regarding the continued growth in manufacturing and services, together with the recovery in agriculture, forestry and fisheries and a promising outlook for the international economic situation.
Regarding the office for lease market, in both cities, total Grade A and Grade B net absorption in 2016 was lower on a year-on-year basis, but this was mostly the result of limited supply, while the number of enquiries remained at good levels.
The office for lease market, especially in Ho Chi Minh City, is expected to see increased leasing activity this year, with the completion of two Grade A and one Grade B office buildings, all large-scale projects.
JLL also forecast that the retail for lease market will continue to see improvements in terms of increased footfall and revenue in existing developments, an increase in the number of new retail center openings and new international brand entries, and the expansion of existing retailers, both local and foreign, providing many types of goods and services. This is expected to be in line with the growth in residential supply, infrastructure, and middle-class incomes.
The new year is likely to experience intense competition between local developers and foreign investors, and in bricks-and-mortar retail versus online shopping.
“The market in Vietnam will witness another strong year in 2017,” Mr. Wyatt said. “The economy is performing well and is considered one of the best performers in Southeast Asia. We expect to see considerable activity in all sectors of the market, with a positive focus in low- to mid-end residential in cities, Ho Chi Minh City’s office market, hospitality, and industrial. Based on the considerable number of enquiries we are receiving from both foreign and domestic investors, we expect M&A activity will hit a record this year.”