Property Development & Investment – Good times are just around the corner

• In 2Q21, HCMC condo market showed recovery with new supply up 141%
  year-on-year (yoy), while Hanoi landed sales volume remained robust.
• We expect property market to recover strongly since 4Q21F with COVID-19
  under control, more abundant housing supply and robust demand.
• Our top picks are VHM, NLG and KDH

HCMC condo market recovered with ample new launches in 2Q21

The sales volume of HCMC condo market in 2Q21 strongly bounced +143.1% yoy to 4,700 units driven by ample new launches of 3,968 units (+141.4% yoy). However, the new supply of ready-built houses still fell 85.3% yoy to 97 units; dragging down sales by 91.4% yoy to 80 units. In 2Q21, the average condo primary price climbed +16.5% yoy to US$2,260 per square meter (psm) while secondary prices for townhouse soared +17.9% yoy to US$4,202 psm as well.

Hanoi landed transaction volume remained robust in 2Q21

The 2Q21 Hanoi new condo supply plunged 36.7% yoy to 3,526 units due to COVID-19 wave from May; leading to a drop of 14.6% yoy in sales volume (3,921 units). Meanwhile the 2Q21 Hanoi new ready-built house supply was flourishing, with +597.2% yoy (1,255 units) in new launches and +460.8% yoy (858 units) in sale volumes. Likewise HCMC, Hanoi housing prices continued to increase in 2Q21, with +7.2% yoy (US$1,472 psm) in average condo primary price and +13.7% yoy (US$5,127 psm) in secondary prices for townhouse.

Good times are just around the corner for property market

We see there are likely to be more challenges for property market in 3Q21F due to 4th COVID-19 outbreak. But we believe the property market will bounce back strongly as soon as the outbreak is under control in 4Q21F. As we expect good times for property market since 4Q21F with housing supply gradually recovery thanks to loosening regulatory bottleneck while higher housing demand fueled by stepping up infrastructure development and low mortgage rates.

Hospitality property: time to appear on investor’s radar

We believe that hospitality property will recover quickly in the future on the back of Covid-19 vaccines presence along with recovery of the Vietnam tourism. The headwinds from the pandemic may be over in the hospitality property market from end-2021.

Our top picks are VHM, NLG and KDH

Re-rating catalyst is recovery in new supply. Downside risks are 1) prolong pandemic could restrict marketing and sales activities, and 2) further upward trend in construction material prices. Our top picks are VHM, KDH and NLG, in view of their positive FY21-22F presales outlook and huge land bank.

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