Industry Report: Property Development in Vietnam

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Report Overview - Property Development - Single-Family Housing Industry Overview in Vietnam 2022

Salient Nature/Key Features of the Industry

• Townhouses are the most sought-after single-family properties. Townhouses account for 62% of the single-family properties sold in Hanoi and HCMC, followed by shophouses (20%) and villas (18%)
• The industry is highly fragmented, mainly with private real estate developers

Value Chain/Business Model

• Players are segmented by their target market: exclusively high-end property developers vs high- and mid-end property developers
• Exclusively high-end developers build villas in prime locations with first-rate facilities and amenities, targeting high-net-worth individuals and foreign investors
• High- and mid-end property developers offer houses in suburbs and outskirts of urban areas for the middle-income class aside from their luxury properties
• Property developers do not focus on affordable housing. Instead, affordable houses are built by Vietnamese landowners or subsidised by the government

Others

• The typical funding structure of real estate projects in Vietnam is subjected to a high level of risk, with only 15-30% of investment capital being contributed capital. The rest comes from homebuyers’ prepayments, bond issuance proceeds, and bank loans
• The nationwide scandals regarding the bond issuance fraud of two prominent Vietnamese real estate developers in 2022 have led to the tightening of liquidity and a drop in public trust
• Banks limited loans to the real estate sector in early 2022, which further depressed liquidity

Single-Family Housing Industry Value Chain

Report Index

Industry Overview

• Townhouses Account for the Majority of Single-Family Houses in Vietnam; Liquidity Constraints Hamper the Supply of New Houses
• Properties Developers Focus on High-End and Mid-End Market Segments; Affordable Housing is Built by Landowners or Subsidised by the Government
• Open Policies with Few Constraints Encourage Participation from Foreign Homebuyers and Investors

Market Trends

• An Unsound Funding Structure Caused Difficulties in Raising Capital, Resulting from Bond Issuance Scandals and Restrictive Bank Lending Policies
• New Supply Declined Since 2021 Due to COVID-19 and Tight Liquidity Conditions; Hanoi Relied on Existing Projects While HCMC Benefits from New Shophouses by Prominent Developers

Competitive Trends

• Fragmented Industry with Many Private Companies; Large and Listed Property Developers to Recover and Thrive Amid Liquidity Crisis
• Vinhomes: Largest Residential Property Developer in Vietnam
• Khang Dien House: Leading Property Developer in HCMC
• Sunshine Homes: Emerging Exclusive Luxury Property Developer