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Demand for “the home” dominates, luxury condo sinks

Demand for “the home” dominates, luxury condo sinks

By the end of the third quarter 2018, the market recorded housing products that meet actual needs to have the best consumption rate. On the other hand, despite many sales tactics, luxury apartments still under-performed. This is because an ideal home is now vastly different when focus is placed on reasonable price, multi-purpose spaces and the surrounding utilities.
11:00, 28/12/2018

Not one sales for the entire month

Nguyen Duc Dung, a real estate broker specialized in high-end apartment, shared that luxury homes are extremely hard to sell, despite many promotion programs and heavy discounts. This time last year, it was easy to sell one or two apartments every month, even during slower time at the end of 2017. Not to mention, high-end customers are fastidious and professional, thus requiring more investment in every stage. Reduced spending, expensive cost, monthly advertising fee, and adding to that is low commission, make it tough for real estate agents to survive through this period.

According to data from the Vietnam Association of Realtors, super-luxury apartments’ supply rose from 115 units at the end of the second quarter to 1,322 units at the end of the third quarter this year, however, only 90 apartments were transacted in this period. Similarly, statistics from Colliers International showed that Hanoi condo market had a gloomy third quarter. In particular, the number of successful transactions dropped 25% compared to the second quarter with only 4,000 units. The mid-end segment continued to dominate, contributing 50% of total sales. The high-end segment came in second, accounting for about 30%. Most notably, there were no luxury apartments were traded in this quarter, while nearly 1,100 affordable condos were sold.

“Reasonable priced house” is the most frequently mentioned phrase in the last 3 years.

“Reasonable priced house” is the most frequently mentioned phrase in the last 3 years.

Colliers International claimed that prices of low and mid-end segments would not dramatically increase because their supplies are abundant and the gap between supply and demand will be narrowed down in the coming years.

Waiting for a breakthrough

Chairman of Xuan Mai Investment and Construction JSC Bui Khac Son said: “We are living in the 4.0 technological era, most buyers are young, who have different thoughts and improved social concepts. For example, we do not need large space to store furniture or invite friends over, because those needs can now be satisfied with multi-purpose space or the project’s surround utilities.

We only need a living room, a kitchen, and a bedroom, but the apartment has to be elegant, the equipment must be advanced, for us to relax after hours of work. Japan, for instance, although they are richer and more civilized, their apartment is surprisingly small, only 40 to 50 square meters, or even smaller. And their apartment is solely for the purpose of living.”

Hanoi’s condo market continues to show a trend of moving away from the city center to places with large green spaces and completed infrastructure. Suburban areas such as Ha Dong, Dan Phuong, and Gia Lam are steadily becoming hotspots for low-cost apartments thanks to their massive land area.

Sharing the same view, General Director of Century Real Estate JSC Nguyen Tho Tuyen stated that “reasonable priced housing” has been a very popular term for the past three years, because actual customer’s demand for this segment always accounts for 80%. In 2017, experts and market research agencies have recognized affordable housing to be the “goldmine” of the market, as businesses have continuously invested, built, and developed thousands of reasonable priced home for the people. As of 2018, demand for houses in this segment stays high, while supply still only levels at 20%.  The fact is buyers’ needs nowadays are not a house to live but an environment for children to develop, and for families to enjoy various utility services.

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