Land funds are increasingly scarce, making it difficult to build affordable housing

Bảo Chương |

HCMC - Input costs for real estate project development have increased, especially land costs, making the goal of building affordable housing far away.

The Vietnam real estate market research report for the first quarter of 2025 by Avison Young Vietnam shows that apartment prices on the market from newly opened projects and secondary supply in Ho Chi Minh City continue to increase strongly.

The supply and demand of the first quarter of 2025 come from the remaining products after the year -end opening of Eaton Park projects (Gamuda Land) and The Opus One (Samty). The market also recorded supply from the Masteri Grand View project (Masterise Homes) with about 616 apartments, located in The Global City (Thu Duc City).

In the last quarter, The Infiniti project (Keppel Land) in District 7 promised to provide the market with about 801 apartments. In early 2025, the project will complete the construction of the first tower in 4 buildings, expected to be handed over in the fourth quarter of 2025.

A report by Avison Young Vietnam shows that in the first quarter of 2025, the market recorded an average increase of 6% in apartment prices in the primary market compared to the previous quarter, reaching 3,200 - 5,200 USD/m2. Notable with the Eaton Park project priced at 5,700 USD/m2 and Masteri Grand View priced at about 5,300 USD/m2.

In particular, projects along metro line No. 1 have had a significant change in secondary selling prices, typically the Gateway Thao Dien project (Son Kim Land) from 3,400 USD/m2 in early 2024 to 4,100 USD/m2 at present, an increase of 20%. Or the Lumiere Riverside project (Masterise Homes) has an average price of 4,650 USD/m2, an increase of 20.7% compared to 2024. In the current context, finding an apartment with a price of less than 2 billion VND in Ho Chi Minh City is extremely difficult

In reality, if before 2018, the supply of apartments priced at 1.5 billion VND/unit in Ho Chi Minh City was quite abundant, then in 2019, the time of the stress of project legal bottlenecks, the apartments above and below 2 billion VND had disappeared from the market. Even many projects that have been opened for sale before have had quite strong price adjustments compared to when launching a new basket of products.

The view given by investors on the story of continuously increasing selling prices is that it is very difficult to implement affordable commercial housing projects in the current period. Project development costs are escalating, land funds are increasingly expensive and scarce...

Therefore, instead of building low-cost housing, investors have pre-positioned the high-end segment, because they also put in that effort, but building high-end projects brings better economic efficiency. If they want to easily sell to many subjects, the investor will adjust the design in the direction of reducing the apartment area to reduce the total amount of money spent by customers.

In a recent meeting with investors at the general meeting of shareholders, many leaders of large real estate corporations when asked about the story of developing a supply of affordable housing to increase liquidity also commented that it was very difficult.

Because, when the real estate market recovers, the story of finding clean land to balance the cost problem and project development will be a "hot" issue. In the context of high project implementation costs, to suit the long-term orientation, many investors have shifted to areas near Ho Chi Minh City such as Binh Duong, Long An, Dong Nai, Ba Ria - Vung Tau... where land funds are still abundant and prices are also "softer".

However, in the coming time, the formula for calculating land use fees applied according to the new price list will increase land costs, clean land funds in satellite areas, so it is increasingly scarce and expensive. This land fund is expected to be sought after more, so clean land prices will no longer be as accessible as before.

Bảo Chương
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