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Retail sales outside the city center are underperforming.
The total supply exceeded 1.2 million square meters of floor space, with 73,000 square meters of new space added from the opening of 3 supermarkets and 2 shopping malls. Three projects closed and 3 projects changed function, resulting in a total reduction of 39,200 square meters of floor space.
Average rental rates decreased slightly by -1% quarter-on-quarter. Average occupancy rates also decreased slightly by -1 percentage point due to new supply in suburban areas with lower rental rates and occupancy. New fashion brands and international F&B brands entered the market, replacing less attractive brands.
Retail sales surged in the F&B, clothing, and household goods sectors. Automated services and online shopping became increasingly popular. E-commerce continued to attract investment, most notably with Amazon's announcement of entering the Vietnamese market.
A vibrant office
Four new projects, including one Class B and three Class C properties, added 53,000 square meters of floor space to the market. Total supply reached over 1.7 million square meters, a 4% increase quarter-on-quarter and a 10% increase year-on-year.
The business outlook remains positive. Average rental rates increased 8% year-on-year. This increase is a result of rising prices for Grade B offices – an alternative to Grade A offices. Occupancy rates remain high at 96 percent.
By 2020, the market is expected to add approximately 440,000 m2 of floor space across all grades. Over the next two years, no new Grade A supply will enter the market.
Serviced apartments - Abundant future supply
Three new projects and one project closed for renovation resulted in a 6% quarterly and 16% annual increase in supply. Total supply reached over 5,100 units.
New projects have impacted overall market performance. Occupancy rates decreased by 3 percentage points quarter-on-quarter, while rental rates increased slightly by 1% quarter-on-quarter due to low occupancy and high rental prices from a new project.
The projected future supply of over 1,000 units entering the market in the next nine months of 2018 will put pressure on overall market performance.
The hotel is being restored.
Supply increased by 2% year-on-year, reaching over 16,500 rooms from 133 projects.
The average occupancy rate reached 74%, up 6 percentage points year-on-year. The average room rate reached $83 per room per night, up 4% year-on-year, driven by rent increases across all three categories, the first such occurrence in three years.
In 2018, Ho Chi Minh City aimed to welcome 7.5 million international tourists, an 18% year-on-year increase. By 2020, 14 new projects will provide approximately 3,500 rooms. More than 300 rooms from 4 three- to four-star hotels are currently awaiting star rating assessment.
Apartments for sale - New supply increases sharply
Over 10,500 units from 13 new projects and the next phases of 9 existing projects were launched. Primary supply decreased by -13% quarter-on-quarter and -32% year-on-year to 28,600 units.
Sales volume decreased across three categories, totaling 13,500 units sold, down -11% quarter-on-quarter but up 51% year-on-year. Category C remained dominant with a 62% market share. Absorption rate reached 48%, up 1 percentage point quarter-on-quarter and 26 percentage points year-on-year.
By 2020, the supply is expected to increase by 122,000 units from 93 projects. District 9 is projected to hold the largest market share at 32 percent. Class C properties will account for the highest proportion with 61% of the future supply.
News: BK - HU
