Savills Vietnam today released its latest paper that provides insight into an often overlooked property sector – Landed Property. In Q2/2016 this sector had the best performance ever with 820 sales in HCMC, or growth of 81% quarter-on-quarter (QoQ) and 110% year-on-year (YoY).

This asset class has come of age and now has critical supply mass, however will it match other asset classes for performance? Savills whitepaper explores the fundamental drivers of demand and considers the investment future for landed property.  Scenarios are explored and supported by open modelling. The report highlights that the smaller townhouse sizes have promoted affordability.  Townhouses can compete with apartments and are not that much more expensive yet offer far greater advantages such as: recreational amenities, pool, and education on site, convenient shopping and the security of a gated community.

Historically a townhouse in HCMC was typically 3 times more costly than a high-end apartment; however this has now reduced to 1.7 times in newly developed areas.  This is a low step ratio that shows landed property is well within reach for many. Savills Vietnam forecasts that landed property demand in 2016 would be YoY 103% higher in HCMC and 88% higher in Hanoi.  Strong demand indeed but supported by a growing affluent class. Compared to regional peers with similar population densities, such as Kuala Lumpur, Bangkok and Jakarta, HCMC and Hanoi’s primary supply of landed housing (less than 10%) is relatively small, leaving ample room for future growth.

“The local landed property market promotes sustainability due to a healthy purchaser structure.”  Troy Griffiths, Deputy Managing Director, Savills Vietnam commented – “End-users account for the majority of purchasers, with speculators less than 10%. Investors are substantial in the townhouse segment, prompting an expanding rental market in the near future. Townhouses have outperformed other residential asset classes in investment returns thanks to land value appreciation and stable rental.” Troy continued.

Full report for Vietnam Landed Property and other real estate reports of Savills Vietnam Research can be found at savills.com.vn/research.

Click 01072016_Savills Vietnam_Biệt thự nhà phố đạt mức bán ra ngoài mong đợi for Vietnamese version.

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