Why is the price range difficult to stop?
“Waves” of different prices in an area, what steps for real estate businesses?
Referring to Thu Duc City, people talk about the area of real estate prices that constantly set new price levels. This place is also an area with big “shocks” in terms of infrastructure, planning and exciting activities of real estate businesses. Hundreds of high-end and luxury real estate projects gather here with prices up to 200-400 million VND/m2. The picture “reverses” when most mid-range real estate projects are upgraded to high-end; luxury to luxury. Worth mentioning, despite the high price, the demand for real estate in this area is still quite good, even some luxury projects “sold out” at the first stage of opening for sale. The question is, when will Thu Duc City’s real estate prices increase?
Notably, real estate prices also have a clear difference in the same area, even just one road apart, the price level has a clear difference. For example, at Vo Van Ngan street, an apartment project with the frontage is asking for more than 100 million VND/m2. This is the price of 2021. Meanwhile, on To Ngoc Van street – the bordering route, there are still apartments priced at 55 million VND/m2 and the same frontage location, which is the same as the Fiato Premier project by Thang Long Real Group. develope.
The representative of this unit once explained why the primary price is much lower than the regional price level, while the apartment is also invested in high-end utilities and smart?, because this is the first time. first to develop the apartment line to the market, so the price offered is for buyers to access and understand the product. This price will likely fluctuate in the secondary market according to the rhythm of the market in general and the value of the area. Thus, the step in pricing strategy of this unit is also different from other units that have developed many product lines in the market.
While, a business is selling a project in Thu Duc City with an expected price of nearly 400 million VND/m2, taking a measure of the high-class living standards of the wealthy class to evaluate the real estate selling price. Many people are concerned about the liquidity of the project when the price is too high, but according to experts, each business has a different step to locate products and customers.
In fact, it is not easy to find an apartment at the price of 50-60 million VND/m2 in Thu Duc City at this time. While the pricing strategy of businesses launching projects to the market is around 100 million VND/m2, even from 200-400 million VND/m2 is quite different. Projects priced at hundreds of millions of VND/m2 are aimed at high-end customers, the elite, in unique locations.
Recently, a new project in Thu Duc City, The Global City, has a price of up to 38.1 billion VND/commercial townhouse with an area of 95m2 (floor area of 361m2). This is the price excluding VAT, and related taxes for the house. Thus, on average, each m2 of land here costs nearly 400 million VND/m2.
In the old District 9, the 270-hectare urban project in Long Thanh My ward is now starting to reserve the river front villa subdivision with the expected selling price of 300 billion VND per unit, land area 350-1,000 m2. This is also the highest offering for the total value of real estate properties in District 9 so far.
Meanwhile, in Thu Duc district (old), the price of commercial townhouses and riverside villas of a project located on National Highway 13 is also recording an asking price of 350 million VND/m2. This price was 25% compared to the same period last year.
The price of land in East Thu Thiem area, South Rach Chiec area, Cat Lai area, Diamond Island area… was previously traded at 160-164 million VND/m2, now it is for sale 200-250 million VND/m2. In particular, the front of Do Xuan Hop street has been sold for 200 million VND/m2.
If before the Lunar New Year, the price of real estate in front of roads in An Phu – An Khanh wards such as Song Hanh, Tran Nao, Vanh Dai Tay, Nguyen Hoang, and Luong Dinh Cua streets has an average transaction price of 200 million VND/ m2, now increases to 240-300 million VND/m2. In some areas such as Do Xuan Hop and Lien Phuong streets, the transaction price increased from 140 – 160 million VND/m2 to 150-200 million VND/m2. This price increase has started to move from the Thu Thiem land auction at the end of 2021.
Immediately after the land auction, a leader of a real estate business in District 3 forecast that the investor would have to sell the apartment for about $20,000/m2 to reach the break-even point. This price is more than double the highest primary price being traded in Thu Thiem area.
According to the survey, in the area, the highest primary price in the Empire City project of the Keppel Land joint venture is at nearly 9,000 USD/m2. The River project developed by City Garden also has a price of about 7,000 USD/m2.
Many evaluations say that the different colors of real estate prices in Thu Duc City show a diverse picture of the segment of this area. It is forecasted that the price wave will continue in Thu Duc City when the infrastructure and planning information is still brighter than in other areas. However, concerns about the settlement of real buyers are gradually becoming challenging when it is difficult to buy a house here with 3-4 billion VND.
Along with that, when the price level is too high, it also excludes a significant number of investors, when there is not enough cash flow to invest in high-end real estate, causing the overall pace of the market to slow down. However, this does not mean that real estate in Thu Duc City is not profitable.
Little known story about real estate Thu Duc City
If long-time investors have invested in real estate apartments, land or townhouses – villas in Thu Duc City, they will notice one thing: The price growth rate in this area market is quite “terrible”. This is also the area that has both a rapidly increasing price band and the most stable demand (including real and investment demand) compared to other regions.
The April 2022 report of DKRA Vietnam showed that the new supply was concentrated in Thu Duc City, accounting for 64% of the supply and 70% of the new consumption in the month. Grade B apartment segment holds the leading position, accounting for 71% of supply and 69% of new consumption recorded in the month.
The supply as well as the general demand of the market continued to maintain the recovery momentum, however, most projects had a rather long communication and booking time, up to 4-5 months. All projects opened for sale in the month have completed legal requirements, meet the requirements for opening to the market, and have a fast construction schedule.
“Scarce new supply, high cost of input materials continue to be the factors that put pressure on the primary selling price of projects”, a representative of DKRA Vietnam emphasized.
Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam, said that the Thu Duc City area continuously appeared expensive apartment projects, priced at more than one hundred million dong per square meter with rapid liquidity. Basically, the supply is not much, while the demand of the people is real, so it is not surprising that the appearance of hundreds of million apartment projects in this area.
Undeniably, the demand for real estate in Thu Duc City is always higher than in other areas
Dr. Khuong assessed that housing products and apartments in Thu Duc city area recorded much higher prices than before due to many factors. The first is information on the establishment of “city within city”, which leads to an increase in the level of investment and budget in technical, social and transportation infrastructure. Second, the supply of apartments in Ho Chi Minh City in general and Thu Duc in particular is very limited. In addition, the area close to the central area of District 1 with the old District 2, Phu Nhuan, Binh Thanh, and District 3, the land fund is increasingly limited, while the area of District 9 and Thu Duc is in the adjacent area. flanking districts 1 and 3 benefit from these expectations. Therefore, real estate investors have grasped the favorable conditions of land fund, planning, and people’s needs to design projects in accordance with the above criteria and expectations of the market. This is not surprising given the change in pricing strategies of investors compared to the past.
However, according to this expert, products with medium to high value are always representative of the urban real estate market. Demand will stay high and not change much. The supply of housing projects will continue to be limited due to the epidemic affecting the project implementation schedule, the high land cost, and the price level will also increase.
Mr. David Jackson, General Director of Colliers Vietnam, said that there are many factors that make real estate prices in Thu Duc City likely to continue to increase in the future. In addition to the planning information, the belief in the future of Thu Duc City of people with real housing needs, investors and investors is one of the important reasons for the rapid increase in house prices. Projects like Thu Thiem international center make people’s trust even more grounded.
It is impossible not to mention the continued limited supply in the market and it is expected that this situation will continue in the near future.
According to this expert, the current supply of new real estate in Thu Duc City is mostly in the mid- and high-end segments. Currently, mid-range apartments here have an average price of about 70 million VND/m2. If there is a supply of apartments around 60 million VND/m2 in this area, it is indeed a “rare product”, capable of attracting strong attention from both real people and investors. People with real housing needs will understand that this is the remaining opportunity for them to find a place to live in Thu Duc City. Meanwhile, investors will certainly have confidence in the large profit when assessing the potential for price appreciation of this city.
“It is forecasted that the secondary price of real estate in Thu Duc City will fluctuate depending on many factors such as the average increase in real estate prices, demand, and market sentiment,” emphasized Colliers Vietnam expert.
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