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Real estate market update – Wait on recovery

• The market absorption is its lowest point. The HCMC only has three new condominium projects, and Villa & Townhouse market did not record any new supply. The average price of the condo market increased by 2% QoQ; and the market-wide price of landed property remained the same, while the price of townhouse segment decreasing by 8% QoQ.
• States Banks of Vietnam (SBV) and The Ministry of Natural Resources and Environment have taken steps to ease pressure for the real estate sector. Especially In term of legal issues, The Ministry has sent document No.3054/BTNMT-QHPTTND to the People's Committees of provinces to guide the solution of legal difficulties. We highly appreciate the efforts of SBV and MNRE, and we expect the market recovery to happen from late 4Q2023, when: 1/The amended Land Law and related decrees are finalized, 2/ Economic factors are reformed and SBV has ample room for decreasing regulatory rates.
• In April, the government approved a project to construct affordable "social housing" for low-income people by 2030. According to the project, the total number of completed social apartments in localities will reach about 1.06 million aparment They also assigned SBV to implement a credit program worth around VND 120,000 bn through specific credit packages for developers and homebuyers of social housing projects. We think that the credit packages are the first steps for the social housing target, and in the long-term, developers with experience in developing social apartments (Nam Long Group with E-homeS, in example) will benefit.
• Real estate developers are cautious in their 2023 pre-sales plan, and they also have policies to support customers and push pre-sales value, with flexible payment terms and better interest package. We expect developers with financial capability, projects with fully-comply regulations (including NLG and KDH) can reach target for condominium products, due to customers’ demand and flexible payment terms. However, with low-rise units, we expect they will delay the sales launch event until the market can clearly recover (in late 4Q2023, as our expectation).