Vietnamese HNWIs are increasing
According to the Knight Frank Wealth Report 2017, the number of super-rich in Vietnam increased dramatically compared to last year and is growing at a faster rate than India (150%) and China (140%).
Over the next decade, Vietnam’s population of ultra-high net worth individuals (UHNWIs) – those with a net worth of USD$30 million or more, excluding their primary residence – is expected to rise by 170%, growing faster than any other nation in the world and foreshadowing the potential of Vietnam’s luxury property segment.
According to CBRE, the overall number of luxury residential properties launched in Saigon only accounts for 2% of the city’s total housing market supply. The real estate services and investment firm also predicts a high absorption rate of 50% in the luxury segment over the 2017-2019 period.
This potential absorption is evidenced by increases in both luxury residential selling prices and rental fees. For example, the rental fee of a two-bedroom luxury apartment in the city center has increased from USD$1,100-3,300 in 2016 to USD$1,200-3,500 in 2017.
Looking for luxury residence
The most successful luxury residence in Saigon is Avalon, located on District 1’s Nguyen Thi Minh Khai Street. Over the past two years, Avalon’s average price per square meter increased from USD$2,500/m2 in 2015 to USD$5,500/m2 in 2017. Although Avalon’s residences operate on long-term lease agreements, the property is more attractive than other projects, which allow ownership but are located further from the city center.
Additionally, due to the limited residential land available in downtown Saigon, the potential of the luxury property segment has increased rapidly. Therefore, the selling price will continue to rise sustainably in the coming years. CBRE predicts the selling price of luxury properties will climb about 7% in the 2017-2019 period.
In addition to limited supply, it is also very difficult to find luxury residential products that can be considered true luxury housing, as there must be a combination of three factors to create a genuine luxury residence: an exclusive, elite community; unique architectural design; and a sophisticated level of service.
Besides, many high-net-worth individuals in Vietnam are looking for foreign real estate projects. Investing in foreign real estate projects not only help HNWIs make profits but also help them to get another passport; especially in some countries with convenient immigration programs such as Portugal, Malta, Cyprus.
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