New supply boosts residential property profits | Business

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Illustrative image (Source: VNA)

Hanoi (VNA) – Residential real estate is one of the segments considered by Vietnam Report Joint Stock Company (Vietnam Report) to have high growth potential in the real estate market. As a result, new supply and the expectation of a high floor price will increase profit margins for real estate companies.

According to Vietnam Report, the supply and demand factors have increased, due to low interest rates.

Around 3,500 new apartments have gone on sale in Hanoi housing market in the first quarter of this year. Mid-priced apartments remained the most popular product on the market, representing 66% of new supply during the period. Demand exceeded new supply with 4,200 units sold.

CBRE real estate consultants predict that 26,000 to 28,000 units will be offered this year and that most of the new supply will come from urban areas.

As market sentiment remains positive, over 90% of new supply will be sold and the primary price will increase at a more moderate rate of 5-8% this year.

Experts from Mirae Asset Vietnam Securities Company agreed, saying supply will improve significantly for the apartment segment this year.

The supply of new housing in Ho Chi Minh City is expected to reach more than 20,000 units this year, mainly thanks to the delivery of existing projects. A series of projects in the city’s suburbs plan to open for sale this year, creating supply for the following years.

Analysts thought the faster opening of new projects would boost corporate earnings this year.

For example, Viet Capital Securities Company (VCSC) expects the Classia and Clarita projects to contribute about 90% of the expected earnings in 2022 for Khang Dien House Trading & Investment Joint Stock Company.

As for Nova Real Estate Investment Group Company, it plans to open for sale a new project in Dong Nai and two new hotel projects in the central coastal and central highlands regions this year and the following stages. Expansion in the southern and central regions will be medium-term while investment in the northern market will be long-term.

Along with new projects showing positive signs of supply in the near future, the fact that the real estate market has shown no signs of slowing down may also help boost corporate profit margins.

According to a survey by real estate site Batdongsan.com.vn, in the first months of this year the price level of many types of real estate showed no signs of stabilizing, although it simultaneously increased in 2021. The price of building materials has continued to rise in a short time is also one of the factors contributing to the high price of real estate, even setting new floor prices in certain segments.

Data from the website revealed that in January, apartment prices in Hanoi and Ho Chi Minh City increased by 4.6% and 1.8%, respectively, compared to the average price for the whole of 2021. ./.

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