Does The MARQ project have enough potential to bring high returns to investors?
January 13, 2021
Vice-Chairman of the People's Committee of Ho Chi Minh City Tran Vinh Tuyen has just signed a decision approving the housing development plan in Ho Chi Minh City for the 2016-2020 period to concretize the orientation, goals and housing development targets of Housing development program in Ho Chi Minh City for the period 2016-2025 has been approved by the City People's Council.
Accordingly, for the existing central area (including District 1, District 3), will develop controlled housing until 2020; disapproving policies, recognizing investors for new housing construction projects. In case the housing projects have been recognized, the investor continues to complete all the procedures to be eligible to start construction.
Product scarcity and central real estate liquidity
In the central area (District 1 and District 3), give priority to increase the planning targets for projects to renovate and build new ones to replace old apartments before 1975; not developing new projects to invest in high-rise housing construction until 2020. Accordingly, the city still licensed to invest in the development of new housing projects in two central districts, but there will be limited and selective options.
Regarding the reason for the petition to abolish the regulation to stop licensing high-rise apartments in the central area of Ho Chi Minh City, HoREA President Le Hoang Chau said that, statistically, the high-end housing segment is accounting for a very high rate about 8,502 units (30%), while the affordable housing segment has only 6,981 units (24.7%), the rest is the mid-end segment.
High-end apartment projects in the city centre enjoy exclusive advantages which creating monopoly status, monopolizing the market share of approved projects in the CBD, which may indirectly push home prices up in the next 2 years. Because the city has decided not to approve more high-rise apartment projects from now to 2020 according to the city housing development plan in HCM for the period of 2016 - 2020.
This makes the supply of apartments in the centre even more scarce. Meanwhile, the demand for housing in the centre is always high. It shows that the real estate centre is very attractive to customers. Although there is no rebound in selling price like new areas such as Thu Thiem, Rach Chiec, real estate always has a steady increase in value, without depreciation over time.
Absorption luxury apartment line at the hub
For real estate, District 1 is known for its sizable price growth, according to statistics from CBRE Vietnam, the average increase in District 1 is from 15% to 20% per year. The reason is also easy to understand because this place has a prime location, surrounded by the Saigon river system, Bach Dang port, Vo Van Kiet canal line, bordering District 3, District 2, District 5, District 10 and District 4.
In addition, the land fund here is quite limited because most of the area is small, can only develop office buildings for rent, while Ho Chi Minh City is restricting the development of housing projects in the CBD. This is the main cause of the current shortage of real estate in District 1.
From 2015 up to now, people of these countries pay much attention to the real estate market in Ho Chi Minh City and District 1 is the focus. For example, in Japan, the elderly are interested in the Ho Chi Minh City market because they want to go to Vietnam for a retirement vacation. As for Singaporeans, Koreans, and Chinese, choose District 1 to rent a house, buy a house to live and work.
Another thing that can be seen is that the real estate projects in District 1 are always few, but the quality, as well as the potential for profit, are very large. For example, a real estate project on Thi Sach street, District 1, was offered in 2016 for about 5,000 USD / m2, now when the house is handed over, this price has increased to 8,000 USD / m2 ”, the expert this said.