Residential market: Trends for 2019

1. Affordable and mid-end in lead

Affordable housing is expected to drive the market in 2019 due to high population growth, reducing household size and the rapid growth of the middle class. Besides, Villas, townhouses and shophouses achieved great results with large number of transactions. Buyers are now seeking not only quality in residential products but also a strategic development vision, in which the project aligns with urban planning (especially transportation & welfare infrastructures).

2. Positive outlook for high-end segment

The high-end segment shows a very positive outlook with increasing upgrade demand from wealthy household and pent up demand given by the lack of recent supply. Investment demand by foreigners also saw strong activities in recent high-end projects, with many projects filling the allocated 30 per cent foreign quota during launch event.

While there is strong demand for high-end residential projects, HCMC authorities has announced a limit on newly registered project development in the city’s Housing Development Strategy in 2020, this term only cover newly-registered projects. Development approved and in planning will still be processed. Our identified future residential supply meets the housing demand if the planning process proceeds smoothly.

3. Location will no longer the top priority

Previously, location was the top priority when choosing housing. However, with transport infrastructure being upgraded and optimized, distance will no longer be a barrier for residents. In more developed countries, many people are willing to drive an hour or two to get to work; in return, they can live in a quieter, more open-space area. According to the development steps of the market, the location factor will become less important. Customers should have a more open view of housing products, especially when purchasing for long-term investment.

4. Diversion to original second – home products.

The real estate market is constantly transforming. Real estate products face many difficulties and obstacles such as changing buyers’ preferences or legal requirements. With new product lines, sometimes regulations and policies cannot keep up; hence, the legal framework for many products is still unclear and inconsistent. This significantly disturbs the trading activities of products; however, investors are making great efforts in ensuring that product development is transparent. On the other hand, simple housing products such as residential, retail and office will always remain as the fundamentals of the real estate market.

5. Adjustments in second-home products.

No new property models are expected to enter; one exception could possibly be within the hospitability market. Instead, existing products will adjust to better suit the needs of customers and worldwide trends. For example, apartments will expand balconies, loggia, and windows to catch natural light; or gradually cease committing to profit in resort projects with re-leasing programs. These trends are expected to be more sustainable development for the housing market.

FURTHER INFORMATION

Savills Residential Portfolio 2H.2018