Property Development & Investment – Modest sales volume amid prices spike

• In 4Q21, HCMC experienced mild recovery in sales volume while Hanoi market is still lackluster.
• We expect a strong recovery in 2022F transaction volume driven by increases in new supply and solid housing demand with high take-up rates.
• Our top picks for long-term investment are VHM, KDH, NLG.

HCMC: Slight recovery in new condo supply

According to CBRE, the 4Q21 HCMC condo market slightly recovered at +5.5% yoy to 7,062 units in new launches and +12.4% yoy to 5,683 units in sales volume. The new supply of ready-built houses climbed 99.0% yoy to 277 units in 4Q21, mostly from small scale projects. We saw landlot secondary prices of HCMC suburban to grow robustly in 4Q21; ie: Hoc Mon (+18.1% yoy), Binh Chanh (+13.8% yoy), District 12 (+13.0% yoy). Meanwhile, the average condo primary price rose by 6.9% yoy to US$2,306 per square meter (psm) in 4Q21.

Hanoi: modest sales volume amid urging prices

The 4Q21 Hanoi new condo supply plunged by 26.6% yoy to 5,328 units, leading to a drop of 33.4% yoy in sales volume (5,920 units). The new supply of ready-built houses rose 14.5% yoy to 593 units in 4Q21. We recorded land prices in eastern Hanoi significantly surged by 18.6%-27.8% yoy given the accelerating infrastructure development. Meanwhile, the average condo primary price picked up 13.0% yoy to US$1,596 psm in 4Q21.

FY22F outlook: poised for a strong recovery ahead

We reiterate our view in previous “Sector Note_3Q21” that the residential market will bounce back in 2022F, supported by: 1) a board-based recovery of macro fundamentals propelling the property market in 2022F; 2) housing purchasing decisions underpinned by affordable mortgage interest rates; and 3) a surge in new supply thanks to the loosening of regulatory bottlenecks. And hospitality property will recover quickly in the future on the back of Covid-19 vaccines presence along with recovery of the Vietnam tourism.

Our top picks for long-term investment are VHM, KDH, NLG

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. We believe that most of the listed property names have closed to their fair value. However, we still like VHM, KDH, NLG for long-term investment, in view of property market recovery and their positive FY22F presales outlook.

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