For the last 10 years:

After several years of falling house prices, Vietnams housing market seems to be
gradually improving. House price declines significantly decelerated in Q1 2014.
Residential construction activity is recovering. Demand is picking up.
However Vietnam's situation is fragile. The economy is slowing, and its banks are
riddled with bad debt. Foreign investors were worried even before the recent riots.
Foreign direct investment (FDI) fell 22% y-o-y to January 2014, to US$397 million.
To aggravate the situation, the recent anti-Chinese riots further threaten foreign
investment. The violent protests, which initially targeted Chinese factories, then
spilled over to facilities of other global manufacturers. More than 400 factories were
reportedly damaged and there were about 21 people killed in the riots.
Nevertheless, after 4 years of house price falls, there have been signs that the
downward trend may be stabilizing, especially in Ho Chi Minh City. During the year
to end-Q1 2014:

In Ho Chi Minh City, the countrys largest city, residential property prices
dropped only 0.11% (-0.38% inflation-adjusted), the 16th quarter of annual
price declines.

Clearly, recovery has not yet arrived. Signs of an economic slowdown emerged in
2013 when GDP growth fell to 5.4%, down 6.7% between 2000 and 2012, according
to the International Monetary Fund (IMF). During the first quarter of 2014, the
countrys economic growth again slowed to 4.96% y-o-y, according to the General
Statistics Office (GSO).
Vietnam has the highest bad debt burden among Southeast Asias bigger
economies. Much money lent during the credit boom (2009-2010) went bad, much
owed by big state enterprises. Moodys Investors Service estimates bad debts at
about 15% of total loans. However, this is disputed by the State Bank of Vietnam,
the countrys central bank, claiming that bad debt accounts for just 9% of total
loans.
The good news is that the government is actively bolstering demand:

The State Bank of Vietnam (SBV) discount rate was cut to 4.5% from 5%, the
refinancing rate to 6.5% from 7%, and the repurchase rate to 5% from 5.5%.
The Ho Chi Minh City government has proposed opening the property market
to overseas Vietnamese.
An exemption of about 10% of the value added tax (VAT) for home buyers is
being proposed by the Housing and Real Estate Market Department.
Homebuyers were given a VND 5 trillion (US$240 million) credit package by
the Vietnam Bank for Industry and Trade (Vietinbank).
Effective January 5, 2014, Decree 11/2013/ND-CP and Joint Circular
No.20/2013/TTLT-BXD-BNV allows property investors to sell land plots with
fully completed infrastructure and without a raw building.

Residential construction has been gradually improving. In Ho Chi Minh City, there
were about 15,500 apartment units in the primary market in Q1 2014, up 1.5% q-oq, but down by 1.8% from a year earlier, according to Savills. In the first quarter of
2014, the total number of newly launched apartments in HCMC was about 2,800
units, the highest level since Q2 2011. On the other hand, in Hanoi, the total
number of newly launched apartments increased 5% q-o-q in Q1 2014, putting the
total supply of apartments to 95,400 units.
In Ho Chi Minh City, the total number of apartments sold fell by 4% q-o-q to 1,600
units in the first quarter of 2014, but was significantly up by 39% from a year
earlier. Grade C projects accounted for about 70% of the volume of transactions. On
the other hand, apartment sales in Hanoi dropped by 6% q-o-q over the same
period.
Vietnam house pricesIn an attempt to promote sales, developers are now applying
unprecedented payment terms," , according to CBRE Vietnam. "For instance,
buyers in the first phase of Gamuda Gardens (part of Gamuda City) can now move
in upon the first 20% payment; the remaining 80% can be made over four years at
0% interest. In the context of abundant supply and increasing competition from midto-low-priced condominiums, such flexible payment terms is one of smarter ways
that developers can use to stimulate sales."
So while a turnaround is unlikely in 2014, house price falls are projected to continue
to decelerate, according to local real estate experts.
Current 2015 situation:
The Vietnamese economy started 2015 on a strong note. The real GDP growth rate
expanded by 6.0% y-o-y in 1Q 2015, the highest ever seen during the last six years.
This positive result was largely contributed by the expanding manufacturing and
construction (8.4% y-o-y, double the pace in 1Q 2014). The forecast of Vietnams
GDP growth rate was revised upwards, reaching 6.5% in 2015. In line with the
countrys improving economy, HCMC recorded a y-o-y growth of 8.0%, 0.3
percentage points higher than the same period last year. Inflation rate (CPI) has
been reined back. Marchs CPI increased by 0.2% m-o-m, sending the CPI in the
review quarter of 0.7% y-o-y, the lowest pace during the last ten years. The slow
increase CPI will allow the SBV room to further cut the interest rates. This is
expected to support the real estate market.
Despite improving domestic demand, external conditions were relatively weak.
Exports in 1Q 2015 increased at a slower rate than the same period last year. This
will possibly put pressure on the foreign exchange. The slower rise of Purchasing
Manager Index (PMI) published by HSBC in March has raised concerns about the
sustainability of the manufacturing momentum. Recent decline in international
arrivals is another issue, which would negatively impact the retail and services
turnover.
The retail podium in Q1 2015 proved positive performance in terms of both
occupancy rate and rental rate as this retail type is located in mix-used
developments. Consequently, it gets benefit from to high consumption from

residents and employees of in those buildings. The occupancy rate of the retail
podium increased from 86.4% in Q4 2014 to 90.7% in Q1 2015 while the asking rent
slightly rose to US$54.5/sqm/month. The shopping centre reviewed a different story.
Both occupancy and rents slightly declined compared to the same period last year.
The new open of Vincom Thu Duc partly contributed to the reducing rents as the
project is located in the outlying district. This translated into the average rent of
US$39.4/sqm/month and the occupancy of 91.3%. Department store maintained its
asking rent of US$52/sqm/month but showed a rising vacant space in nonCBDs
retail development in the review quarter. The market has recently observed some
retail operators utilized spaces along the entrance, elevators to lease to tenants
with low rents. This helped increase revenue but contributed to the falling average
rents.
In general, the office market did not show significant changes in both CBD and nonCBD districts in the review quarter due to the lack of leasing activities caused by the
end of the fiscal year. However, slight increase in asking rents were recorded at
Grade B office building thanks to the rising newly established companies. Most of
these companies are local small-medium enterprises who cannot afford rents of
Grade A buildings but require good locations in the city centre. Rents of some Grade
B buildings which have good locations in the city centre and have the rent of US$2025/sqm/month were full occupied. Meanwhile Grade A office buildings remained
fragile. Some Grade A buildings are facing fierce competition from lately quality
buildings. Although the project has not been officially opened yet, Le Meridien was
fully occupied. Similarly, thanks to a reasonable rent, Vietcombank Tower which will
come online in Q2 2015, has attracted many new international companies, over
60% of the office space was leased.
New launches in Q1 2015 declined by 36.3% q-o-q to 4,545 units in light of the long
traditional year-end lull. However, the figure showed a y-o-y growth of 98.6%. Many
of these projects were cleared years ago without launch until January 2015. These
signals obviously indicated developers strong confidence in the recovering market.
The high-end segment remained the largest proportion (61.1%) and was followed by
the affordable segment. On the back of the improving market confidence and
acceptable prices, Q1 2015 recorded approximately 4,360 transactions, increasing
by 82.2% y-o-y. Most of transactions recorded at newly launched projects.
Compared to Q4 2014, sales volume witnessed subdued activities as the lack of new
launches driven by holiday season which almost kicked off the second half of
February. Despite the overall sales volume decrease on a q-o-q basis, the high-end
segment continued to increase in sold units thanks to the strong return of investors