Affordable Housing Makes a Surprise Appearance in Binh Duong
Ho Chi Minh City and Binh Duong have consistently topped the southern market for apartment segments. However, in recent years, while Ho Chi Minh City has lagged in affordable housing supply, Binh Duong has flourished with new projects. Yet, it is rare to find projects in this area with a price range starting from VND 1 billion per apartment.
It is worth noting that in 2021, Mr. Vo Huynh Tuan Kiet, Director of Residential CBRE Vietnam, asserted that apartments priced at VND 1 billion could only be found in Long An, an area with ample land and lower property prices. In contrast, Binh Duong and Dong Nai, despite their proximity to Ho Chi Minh City, have experienced significant price increases, making it challenging for these areas to offer affordable housing options.
Surprisingly, towards the end of 2024, Binh Duong unveiled several apartment projects with prices exceeding VND 1 billion per unit. This came as a surprise, as the area had predominantly offered projects priced from VND 2-3 billion, with only a scarce supply of apartments in the VND 1.2-1.5 billion range.
For instance, on September 10th, the joint venture between Japanese companies TT Capital and Cosmos Initia (a member of Daiwa House Group) and Koterasu Group officially launched the TT AVIO project next to Vincom Plaza Di An in Binh Duong. This project offers a range of apartments priced at VND 1.23 billion per unit, a rare find in the area. The project is built on a land area of over 15,952 square meters and comprises nearly 2,000 apartments with areas ranging from 40 to 81 square meters. Notably, for 300 units, customers will have the exclusive privilege to “negotiate payments” according to their financial capabilities to own an apartment. Located right next to Thu Duc City (Ho Chi Minh City), the project presents an opportunity for those with practical housing needs to become homeowners, while also offering a long-term investment prospect with sustainable profitability.
In the same vicinity, Phu Dong SkyOne by Phu Dong Group is expected to introduce 780 affordable apartments by the end of this year. 75% of the project’s inventory is priced from VND 1.5-1.8 billion per unit.
On Thuan Giao 25 Street, in the Thuan Giao 2 residential area, Thuan An City, the Benhill apartment project is also making its way to the market with prices starting from VND 26 million per square meter, equivalent to approximately VND 1.1-1.5 billion for apartments ranging from one to two bedrooms.
In addition to these brand-new projects, there are also soon-to-be-completed projects in Di An, Binh Duong, with prices ranging from VND 36-45 million per square meter (translating to roughly VND 2 billion per unit), that are being launched in the last quarter of 2024. Projects such as Phu Dong Sky Garden, Picity Sky Park, Opal Boulevard, Flora Novia, and Bcons Polygon have witnessed stable demand in both the primary and secondary markets.
In reality, the supply of apartments priced from VND 1.2 to 1.8 billion in Binh Duong at this point in time is scarce, mostly consisting of smaller units within projects. Industry insiders liken this affordable supply to “rain during a drought,” as demand has been pent-up while buyers have been waiting for a long time.
Ho Chi Minh City and Binh Duong: A Contrast in Market Trends
Compared to Ho Chi Minh City, Binh Duong still offers a more diverse range of affordable housing options. The “color” of supply continues to diverge in these two markets in the final months of 2024.
Analyzing this situation, Ms. Giang Huynh, Director of Research and S22M at Savills Vietnam, shared that in Ho Chi Minh City, apartments priced below VND 3 billion are currently considered affordable. However, this segment is expected to account for less than 5% of the market in the next three years. The shortage of supply, coupled with primary apartment prices reaching VND 72 million per square meter, has led Ho Chi Minh City to “cede ground” to neighboring areas like Binh Duong and Dong Nai.
In July 2024, there was a continued positive interest in Binh Duong real estate, attributed to more affordable prices compared to Ho Chi Minh City.
Representatives from Batdongsan.com.vn also acknowledged that apartments priced at around VND 30 million per square meter have completely disappeared from Ho Chi Minh City’s market. The average listing price for apartments in the city has increased from VND 31 million per square meter in 2018 to VND 48 million in 2024. Over the past six years, the average annual price increase for Ho Chi Minh City apartments has reached 55%.
Nonetheless, these figures represent the market average, and in reality, some areas in Ho Chi Minh City have prices as high as VND 150 million per square meter, and even up to VND 200 million in certain locations. A recent report by DKRA Group revealed that a project in the city reached a primary price of nearly VND 500 million per square meter. With supply remaining limited and the product mix increasingly skewed towards the luxury segment, Ho Chi Minh City faces a significant challenge in terms of demand in the coming years.
Meanwhile, in neighboring areas like Dong Nai and Binh Duong, the supply of affordable housing (priced below VND 2 billion per unit) continues to perform well. Although the competition for demand is no longer as effortless as in previous years, the softer prices and proximity to Ho Chi Minh City still offer considerable advantages to these regions.
According to research firms, properties priced between VND 1-3 billion remain the most sought-after in urban areas, indicating a substantial latent demand that Ho Chi Minh City is unable to meet. While Binh Duong is currently providing more affordable options for Ho Chi Minh City, this number is not particularly prominent compared to the region’s potential. Moreover, in Binh Duong, the number of apartments priced below VND 2 billion per unit is starting to diminish in the market offerings.
Homes priced between VND 1-3 billion per unit have been the most searched category to date. Source: Batdongsan.com.vn
A few years ago, many projects in Binh Duong were sold at prices below VND 1.5 billion per unit, but now, the majority of projects have prices ranging from VND 40-45 million per square meter. The slower demand in some projects is also partly due to the rapid increase in apartment prices over a short period.
Suitable Land for Affordable Housing is Becoming Harder to Find
A local real estate company developing a project in Binh Duong recently shared that it is increasingly challenging to find suitable land with favorable planning and affordable land prices to develop affordable housing projects. Most of the projects launched recently are built on land that has been held by local businesses for quite some time.
The increase in input costs has become a significant pressure for businesses when determining output prices. This is the primary reason why newly launched projects tend to have higher price levels than their predecessors. In the future, the number of apartments priced below VND 2 billion per unit in Binh Duong may become as scarce as they are in Ho Chi Minh City today.
The surge in price levels has also made it difficult for new businesses, even those with strong financial capabilities, to acquire “cushion land.” They may have land, but it might not be suitable for planning and meeting future potential and location requirements.
High prices and the lack of affordable housing are creating challenges for the future. Source: Savills
Despite the government’s repeated emphasis on providing housing for middle-income earners, limited land availability and stringent legal requirements have created significant obstacles to achieving this goal. The market is still “grappling” with finding a solution to this issue. Even companies with ongoing projects face more pressures than advantages. Maintaining affordable prices is not a simple task in a competitive market where input costs show no signs of cooling down.
“The issue of a lack of affordable housing has been a constant topic of discussion. The market still has too many luxury products. This needs to be addressed and clarified in the specific context of the market,” emphasized the Savills expert.
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