Off-City Retail Underperforms
Total supply was over 1.2 million square meters with 73,000 square meters of new floor space from 3 supermarkets and 2 shopping centers opening. Three projects closed and 3 projects changed functions, a total decrease of 39,200 square meters of floor space.
Average rents decreased slightly -1% QoQ. Average occupancy decreased slightly -1 percentage point due to new supply in non-CBD areas with low rents and occupancy. New fashion brands and international F&B brands entered and replaced less attractive brands.
Retail sales increased in F&B, clothing and household items. Automated gadgets and online shopping became popular. E-commerce continued to attract investment, highlighted by Amazon's announcement of entering the Vietnamese market.
Bustling office
Four new projects, including one Grade B and three Grade C, added 53,000 square metres to the market. Total supply reached over 1.7 million square metres, up 4% quarter-on-quarter and 10% year-on-year.
Performance remained positive. Average rents increased 8% year-on-year. This increase was due to the increase in prices of Grade B offices - an alternative to Grade A offices. Occupancy remained high at 96 percent.
By 2020, the market is expected to have approximately 440,000 square meters of floor space from all grades. In the next two years, no Grade A supply will enter the market.
Serviced apartments - Abundant future supply
Three new projects and one project closed for renovation, increasing supply by 6% quarter-on-quarter and 16% year-on-year, bringing total supply to over 5,100 units.
New projects impacted overall market performance. Occupancy decreased 3 percentage points QoQ and rents increased slightly 1% QoQ due to low occupancy and high rents from a new project.
The expected future supply of more than 1,000 units, entering the market in the next 9 months of 2018, will put pressure on the overall performance.
Hotel Restoration
Supply increased 2% year-on-year to over 16,500 rooms from 133 projects.
Average occupancy was 74%, up 6 percentage points year-on-year. Average room rates were $83/room/night, up 4% year-on-year as all three categories increased rents for the first time in three years.
In 2018, Ho Chi Minh City aims to welcome 7.5 million international visitors, an increase of 18% year-on-year. By 2020, 14 new projects will provide about 3,500 rooms. More than 300 rooms from 4 3- to 4-star hotels are currently awaiting star rating.
Apartments for sale - New supply increases sharply
More than 10,500 units from 13 new projects and the next phase of 9 existing projects were launched. Primary supply decreased -13% QoQ and -32% YoY to 28,600 units.
Performance declined across all three grades, totaling 13,500 units sold, down -11% QoQ but up 51% YoY. Grade C remained dominant with 62% market share. Absorption was 48%, up 1 ppt QoQ and 26 ppt YoY.
By 2020, supply is expected to have an additional 122,000 units from 93 projects. District 9 is expected to have the largest market share at 32 percent. Class C accounts for the highest with 61 percent of future supply.
News: BK - HU
