Difficulties in cash flow or legal obstacles have led to the delay or complete halt of many high-end and ultra-luxury projects that were previously announced. This situation could potentially result in a scarcity of supply in this segment when the market recovers.
Each project has its own fate
About 5 years ago, the real estate market in Ho Chi Minh City experienced a surge with a series of high-end and ultra-luxury projects being announced at prices ranging from $7,000 to $10,000 per square meter, equivalent to approximately 160-225 million Vietnamese Dong per square meter. There were even rumors of projects reaching billion Vietnamese Dong per square meter. Notable examples include Alpha Hill, The Vertex Private Residences, The Grand Manhattan, The Marq, IFC Saigon, Metropole Thủ Thiêm, Lumière Riverside, and Lumière Boulevard.
Among them, most of these projects are located in prime locations, but each project has a different fate. Recently, Phase 3 of the Metropole Thủ Thiêm Complex, owned by Quoc Loc Phat Joint Stock Company, has reached its topping-out milestone. This phase is known as The Opera Residence and is situated on the plot 1-17 in the new Thủ Thiêm Urban Area (Thu Duc City) with a scale consisting of 3 basement levels, 5 podiums, and 2 towers reaching a height of 20 floors.
Commenced in mid-2019, The Opera Residence, located on this 1.1-hectare plot of land, is expected to provide 646 luxury apartments for the Thủ Thiêm area. By the end of 2020, the developer had launched several units with prices ranging from 90 to 138 million Vietnamese Dong per square meter. Currently, the secondary market transaction prices for these units are recorded at around 170 to 385 million Vietnamese Dong per square meter.
Not far from there is Lumière Boulevard...
One of the two projects acquired by Masterise Homes in the Vinhomes Grand Park mega-urban area (Thu Duc City) has also reached its topping-out stage. It consists of 5 towers ranging from 22 to 30 floors, offering over 2,400 high-end apartments, shophouses, and penthouses with sizes ranging from 50 to 370 square meters.
The Lumière Boulevard project is situated on a land area of nearly 3.4 hectares and is scheduled to be launched for sale in the second quarter of 2023. According to some real estate brokers, the primary prices of the apartments in the project currently range from 65 to 80 million Vietnamese Dong per square meter. However, on various real estate listing platforms, the selling prices have a wider range, varying from 46 to 100 million Vietnamese Dong per square meter depending on the location and type of apartment. According to information from the developer, the project is expected to be handed over by the end of this year.
In addition to the projects that have resumed development, many other luxury condominium projects announced around the same time are still awaiting resolution of legal issues. The Grand Manhattan, developed by Novaland, is a prime example. This project consists of three 39-story towers, offering over 1,400 apartments, a 4,200-square-meter internal park, five floors of international standard hotels, and two commercial floors. The apartments are uniquely designed and independent, with management and operations expected to be handled by Savills Premium and Minor Hotels.
The condominium complex, situated on two fronts of Co Bac and Co Giang streets, running parallel to Vo Van Kiet Boulevard and Tran Hung Dao Street, was previously known as Co Giang Apartment. It received investment approval from the Ho Chi Minh City People's Committee in 2017 and 2018. The project's construction began in 2022 but had to be temporarily halted due to legal complications. As of early June 2023, the project has progressed up to the 28th floor and is among the 7 typical projects that the city is expediting to overcome difficulties related to financial obligations regarding land use rights.
While The Grand Manhattan project has shown some recent developments, The Vertex Private Residences project, located on Ngo Van Nam Street and owned by Phuong Nam 3A-2 Real Estate Trading Company, has been inactive for several years. This luxury condominium project was planned to cover an area of over 3,000 square meters, comprising 40 above-ground floors and 5 basement levels. The initial asking price on certain online channels reached over 10,000 USD per square meter in 2018.
The project commenced in 2017, with the expected completion and handover scheduled for the fourth quarter of 2019. However, until now, it remains unfinished. Inside the construction site, all building activities have come to a halt, with no workers present and many construction equipment showing signs of deterioration.
Sharing a similar fate is the IFC Saigon project by Viva Land Investment and Development Joint Stock Company, which was rumored to have a selling price of up to 1 billion VND per unit in mid-2022. The project, formerly known as Saigon One Tower, started construction in 2009 with an expected completion date in 2011 and a total investment capital of approximately 5,000 billion VND. However, when the construction reached 80% completion, it abruptly came to a halt.
It wasn't until the end of 2021 that the project unexpectedly saw an influx of workers and machinery, along with the news that Viva Land, a subsidiary of Vạn Thịnh Phát Group's ecosystem, had acquired it. However, at present, the project is once again facing the risk of being "put on hold" as several high-ranking executives of Vạn Thịnh Phát are entangled in legal issues.
Shortage of supply when capital flows return
Despite the limited supply, housing products in Ho Chi Minh City are quite diverse, with many developers focusing on building social housing, affordable housing, and low-cost housing.
Recent data published by Colliers Vietnam shows that the prices of luxury apartment units in District 1 and the new urban area of Thu Thiem are maintained at the range of 7,000-17,000 USD/m2, equivalent to 164-398 million VND/m2. The secondary market prices of projects located along Metro Line 1 are showing a slight increase due to the infrastructure boost.
"In the first quarter of 2023, only one new project was launched in Thu Duc City, Ho Chi Minh City, which is the Elysian project by Gamuda Land, with an average absorption rate of about 40-60%," emphasized the report by Colliers Vietnam.
In reality, when the market is favorable, there is still strong demand for luxury and ultra-luxury products. However, since the middle of last year, there has been a slowdown, and some developers are not as eager to accelerate the pace of project implementation. In addition, the availability of funds for development is a significant concern for many developers at present. As Mr. Nguyen Van Dinh, Vice Chairman of the Vietnam Real Estate Association, has stated, "Managing cash flow is now more important than ever. Only developers with strong financial resources and a solid legal foundation can ensure project progress and completion quality."
Masterise Homes has attracted a lot of attention in recent times
However, this is also an opportunity for well-established developers to dominate the high-end and luxury housing market. For example, in just the past three months, the relatively young developer, Masterise Homes, has attracted a lot of attention by simultaneously topping out three luxury condominium projects: Grand Marina Saigon in District 1, Ho Chi Minh City; The Ritz-Carlton Residences in Hanoi; and Lumière Riverside and Lumière Boulevard in Ho Chi Minh City.
Mr. Mahdi Samhouri, Deputy Director of Project Development and Deputy Director of Design at Masterise Homes, stated that the project developer is closely collaborating with partners to ensure the progress and quality of the three aforementioned projects meet international standards.
"We are making every effort to deliver the projects on time and with the committed quality, providing future residents with a luxurious living experience similar to high-end real estate projects in Hong Kong and Dubai," Mr. Mahdi further shared.
Meanwhile, Ms. Vo Thi Khanh Trang, Deputy Director of Market Research at Savills Ho Chi Minh City, analyzed that the market is currently lacking luxury projects that adhere to the schedule, as most of the new products are in the affordable segment, catering to the majority.
The C-grade product segment accounts for the largest share of sales at 67%, followed by the B-grade segment at 27%. The A-grade segment only accounts for 6% of the market share, experiencing a 76% decrease compared to the same period last year," Ms. Trang provided information.