Overview of the real estate industry in the first months of 2023 and market forecast in the last months of the year

Overview of the real estate industry in 2023’s first few months

Industrial park real estate industry

 

According to Real Estate Industry Report by VIRAC, in the 1st quarter 2023, about 2000 hectares of industrial land were added nationwide, mainly in industrial parks in the North and the South. The largest source of additional supply for industry is the two provinces of Binh Duong and Long An.

Image 1: Additional supply of industrinal land 2023-2027f
                                 Image 1: Additional supply of industrinal land 2023-2027f

Source: VIRAC’s Report

 

The supply of industrial land in the North mainly comes from 2 projects in Bac Ninh and Hai Duong. Due to the development after the Southern Industrial Park, the Northern Industrial Park is predicted to expand in the period from 2023 to 2027.

 

Although the area of ​​industrial land is expanding, the demand for industrial land is showing signs of slowing down in the South. This may be due to the impact after 2 years of the Covid-19 epidemic, which led to businesses having to reduce production scale. However, the occupancy rate in key cities such as Binh Duong and Ho Chi Minh City is still very high, showing the attractiveness of these areas. In the North, the increase in new supply caused the occupancy rate to decrease slightly.

 

Image 2: The occupancy rate of industry land in the North by quater

 

Although the occupancy rate of industrial land is still high, the asking rents in all areas are high, especially in key areas such as Binh Duong, Ho Chi Minh City, Bac Ninh, and Hanoi.

 

 Office real estate industry

 

The supply of office real estate is still limited: in Ho Chi Minh City, only the OfficeHaus building in the Celadon area was added in the first quarter, while in Hanoi, the new Grade A supply in Hanoi was the new Lancaster Luminaire building in the area. Ba Dinh.

 

Although the office supply is low, the vacancy rate in all segments still tends to increase, showing that the office rental market is decreasing.

 

This leads to a cooling down in office rents, especially in the high-end segment. According to VIRAC’s first quarter report on the real estate industry, in Hanoi, the average rent of Grade A segment was 26.6 USD/m2/month, up 2.6% from the previous quarter and 6.6% over the same period last year.

 

Image 3: Asking price by segment

 

Retail

In the first quarter of 2023 with slow GDP growth combined with unpredictable changes in the economy, people are more cautious in their purchasing decisions. Therefore, the retail real estate market has almost no new additional supply. VIRAC’s Q1 real estate report showed that HCMC’s total retail supply reached 1,096,628 NLA m2. In Q1/2023, more than 20 brands opened and expanded, mostly Japanese brands: MUJI Lifestyle at Vincom Mega Mall Thao Dien (Q2), Uniqlo and ABC Mart Grandstage at Thiso Mall (Q2).

 

Along with the lack of additional supply, the retail real estate market’s demand has not fluctuated much. This is shown by the average vacancy rate of malls and downtown areas of Ho Chi Minh City is less than 6% and all prime locations are almost filled. This makes it difficult for small and medium retailers to enter the market.

 

Retail rental prices in all segments are also relatively stable. According to information from VIRAC’s report, in Ho Chi Minh area, the rent in the central segment is 224 USD/m2/month (unchanged compared to Q4/2022); the non-CBD segment is 41 USD/m2/month (slight increase compared to the previous quarter).

 

Image 4: Ho Chi Minh real estate industry

 

Apartment market for sale – real estate industry

 

According to VIRAC’s report in Q1/2023, about 2,900 new apartments were offered for sale, double the same period last year and 1.2 times higher than the previous quarter. The Vinhomes Grand Park project in District 9 contributes nearly 50% of the total supply. However, currently, new projects in HCM are quite limited (only 3 projects). Most of the projects are in the high-end segment. In the Hanoi market, the supply of apartments decreased over the same period and this number also decreased compared to the fourth quarter of 2022.

 

Image 5: New supply and number of apartments sold in Hanoi market
                                            Image 5: New supply and number of apartments sold in Hanoi market

Source: VIRAC’s Report

 

Although the supply of the first quarter of 2023 decreased compared to the fourth quarter, the sales volume compared to the fourth quarter of 2023 increased. This shows an increase in the demand and ability of buyers to buy houses.

With the supply matching the number of apartments sold, the price of apartments for living still increased slightly in Hanoi and increased sharply in the Ho Chi Minh City area.

 

Image 5:  Vietnam real estate industry

 

Forecast of the real estate industry in the last months of the year

The real estate market in the last months of 2023 is expected to prosper. This is due to government support policies and ongoing infrastructure projects.

 

Resolution No. 33/NQ-CP on a number of solutions to remove and promote the real estate market effective from March 11, 2023 and Decree 08/2023/ND-CP on corporate bonds effective from March 5, 2023 has partly helped to remove the difficulties of businesses in terms of cash flow: allowing investors to relax debts, reducing liquidity pressure on investors. This Decree and Resolution are like two lifesavers of businesses in a time of volatile world economic situation. Along with that is the Decision 388/QD-TTg approving the project “Invest in building at least 1 million social housing apartments for low-income people and industrial park workers in the 2021 – 2030 period” effective. Since April 3, 2023, support policies and incentives for investors to participate in social housing development have been given more attention, which is expected to attract more investors to develop this type of housing. 

 

Combined with that, the development of infrastructure in the coming months also promises a bright future for the real estate market from now until the end of 2023. Specifically, in 2023 our country will have many highways. connecting key areas, saving travel time. Typically, ring road 4 with the starting point at km3+695, belongs to Noi Bai – Lao Cai expressway to the end point of Noi Bai – Ha Long highway passing through 3 cities and provinces: Hanoi, Bac Ninh and Hung. Yen. In the central region, there are North-South expressway projects, while in the South are roads connecting with some major provinces. The development of these routes will be a great opportunity for investors in the future.

 

The above information is updated from “Vietnam Real Estate Industry Report Quarter 1/2023“. The report provides full information on macroeconomics, commercial supply and demand of the retail real estate industry, industrial park real estate, residential real estate, office real estate, related information. observations and forecasts from the most up-to-date data.

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