One of the last frontier markets to emerge in Asia, we see Vietnam as a ten-year buy.
- Merrill Lynch strategy report, February 2006
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:: Vietnam Stock Markets ::
HOSE - Ho Chi Minh Stock Exchange
HASTC - Hanoi Stock Trading Center
:: Vietnam Stock Brokers ::
Ho Chi Minh City Securities - HSC
:: Vietnam Funds ::
:: Vietnam Stock News ::
CBRE came out with an interesting overview report on Vietnam's residential property market.
While the speculative market bubble has clearly imploded, they report that there is still some fundamental demand among end-users for reasonably priced family units.
They see this as a sustainable growth market for the coming years. (ie apartments for actual Vietnamese end-users at $1000 per sqm, not luxury condos for speculators and god-knows-who at $6000 per sqm.)
Some conclusions worth noting:
* Luxury Apartments: The decrease is not much for near to/completed projects such as those below (Lancaster -13%, Avalon -5%, The Manor -18%, Saigon Pearl -16%). Much higher decrease for others, as much as 40%.
* Last year CBRE sold over 12,000 apartments in Vietnam, selling out 100% of its inventory. This year only around 30% of available units have been sold. CBRE apparently sold 12,849 units in 2007, the first half of 2008 has seen sales of only 2,350 units.
* A lot of new units are still in the pipeline:
H2 of 2008 / 2009 / 2010 / 2011 / 2012
7,000 / 10,000 / 18,500 / 20,000 / 22,500 (new units)
* Projects that are selling successfully tend to be more affordable units in suburban / non-central locations.
Some conclusions you may want to take with a grain of salt:
Why Buyers Should Buy Now?
* Better deals than this time last year
* More options in the mid-level price segment and flexibility in the market
* Visible construction progress and realistic hand-over dates
* It is believed that after this ‘cooling off’ period, the condo market price will go up again… quickly!
As always Buyer Beware...
Full Reports here:
Adapting To Market Changes Residential Development Workshop Presentation in Hanoi on 12 August 2008
English version
Vietnamese version
Adapting to Market Changes Residential Development Workshop Presentation in HCM on 31 July 2008
English version
Vietnamese version
housing prices still out of whack
When I look at housing price/rental price ratio, it's way out of whack like it still is in California.
I rent a house in District 3 now that probably has a market price of at least 1 billion. I pay 4.7 million per month in rent. Using the traditional metric of a house being worth 100 times the monthly rent, that's 470 million. Even 4.7 million is high for most families in HCM city especially if one limits housing costs to 25% of total take home pay. How many folks make 20 million a month in HCM? We're talking 1%. Unless they jam 10 families into one house like Mexicans do in the United States, I'd say that even half a billion is overpriced for the house. However, it's a convenient place to live for me.
Using a housing price to income ratio of 3, one would have to make 14 million a month to really truly afford a house worth 500 million. 14 million isn't a realistic salary for many people even in HCM. I know folks who can't even get a minimum wage job.
Real estate prices in HCM are inflated similar to many markets around the world. Is it any wonder that housing prices are getting trashed just like other housing bubbles in the world?
Housing loan is relatively new in Vietnam
Most houses are purchased using cash or SJC gold.
Hidden Wealth
There is a lot of hidden wealth in gold and cash available for real estate transactions that is not reflected in official GDP statistics and average salaries.
This is not to imply that the property market is not inflated, it certainly IS, but...
* Rental yields on property in Vietnam are consistently very low, maybe half what you would expect in a market like the US (This helps explain why you value this property at half a Billion while the market price might be double this)
* Asians place a very high value on property generally (See Hong Kong, SIngapore, Korea, Japan...)
* On top of the general Asian love for property Vietnamese have a particular addiction for property investment. It is the only investment most people here know or trust. Plus is is a convenient way to launder large amounts of cash from unofficial or unreported sources (read dirty money and/or overseas relatives)
(Wanna know just how much money is flowing in from overseas? Over $631 Million in the first half of this year in official remittances alone! Viet Nam News )