Markets & Prices
Last updated: Wednesday, March 29, 2017
Hanoi Property: Supply Rises with VolatilityPosted: Friday, October 14, 2016
Primary selling prices of many projects climbed 6 - 8 per cent, while investors witnessed a decline in selling prices on the secondary market due to increased supply.
A report on Hanoi property market in the third quarter of 2016 released by CBRE Vietnam on October 4 showed that the market saw significant changes in the past three months, including residential housing, retail spaces and offices for lease.
Slight growth in primary prices
In the past quarter, more than 6,800 new apartments were opened for sale from 16 projects, up 14 per cent from the previous quarter but down 38 per cent from the same period of 2015. The western region continued to be the main source of apartments put up for sale, accounting for 36 per cent of the total, slightly lower than the rate it held in the previous quarter (40 per cent).
Mid-range segment was still the majority in new offers but there was a sharp rise in upmarket and luxury segments. Specifically, about 3,000 apartments from these segments were launched in the third quarter of 2016, accounting for 45 per cent of the total units opened for sale.
Overall, the market sentiment remained optimistic in the quarter. Total of 5,279 apartments were sold in the three-month period, up 52 per cent from the previous quarter. The number of sold units in the premium segment continued to show the ongoing growth trend starting in 2016, with the average quarterly growth of 13 per cent.
In the first three quarters of 2016, approximately 14,200 apartment units were sold while nearly 50 per cent were mid-range units.
Selling prices on the primary market tended to rise. Specifically, selling prices in projects opened for sales in previous quarters looked up 2 per cent on average. Mid-market and up market segments increased 6 per cent and 8 per cent in the quarter, respectively.
However, on the secondary market, the medium price decreased slightly by 0.2 per cent from the previous quarter. The upmarket segment saw the biggest decline of 1.9 per cent, while other segments slipped from 0.2 per cent to 1.8 per cent.
According to CBRE's survey, prices of villas on the secondary market also dropped 1.9 per cent from the previous quarter, but rose 1.3 per cent over the same period of 2015.
Recent developments showed that property speculators in Hanoi tended to start selling their assets amid speculation that the supply will increase from now till the end of the year.
Office rentals fall
In the office segment, in the last quarter, the office supply continued to rise with the total supply of 1.1 million square metres, of which Grade B offices accounted for 64 per cent.
By demand, the absorption rate was approximated 23,300 square metres in the third quarter, up 23 per cent from the previous quarter, but still below the rate in 2015. Customers tend to hire new office buildings with better amenities and more reasonable prices, forcing owners of other offices to lower rents to attract customers.
By sector, manufacturing, technology and education sectors had the biggest demand for office space. The area of less than 300 square metres was the most popular option in Hanoi.
In this quarter, asking rents declined from the previous quarter in both Grade A and Grade B segments. The average asking rent of Grade A offices fell by 0.8 per cent from the previous quarter to US$28 and the average asking rent of Grade B offices slipped 1.7 per cent from the previous quarter to US$17.8. More reasonable rents improved occupancy rates for both Grade A and Grade B offices.
In return, the average vacancy rate for Grade A and Grade B office buildings fell 2.67 percentage points and 1.79 percentage points from the previous quarter, respectively. By locality, office blocks in Dong Da and Ba Dinh districts had the highest occupancy rate, with an increase of up to 3.5 percentage points in both Grade A and Grade B offices.
More Grade A and Grade B offices will be offered in the coming time. The western part of Dong Da and Ba Dinh districts will have more new offices.
Retail spaces also increased in the last quarter. Mipec Riverside Long Bien project supplied 24,000 square metres of retail space. The total retail space area currently reaches 720,000 square metres, up 2.3 per cent from the past quarter and up 18 per cent year on year.
All changes occurred outside the downtown of the city, while supply in the downtown remained unchanged from the first quarter of 2015.
In this quarter, the vacancy rate rose by 2.9 percentage points quarter on quarter and 1.06 points year on year.
The average rent of shopping centres in Hanoi remained stable. Due to better performances of shopping centres in the downtown, rents here increased 0.52 per cent on a quarterly basis, while rents dipped 0.96 per cent outside the downtown.
The fourth quarter is forecast to be an active period when three shopping malls are scheduled to be put into operation, adding 111,000 square metres to the market. Two of these projects are owned by Vingroup Joint Stock Company. All three projects are located outside the downtown.
Meanwhile, the serviced apartment market did not have new supplies in Hanoi in the third quarter of 2016. The market supply totalled 3,239 units, with over 30 per cent having two bedrooms.
The supply of Grade A serviced apartments accounted for 71 per cent of the total supply. The biggest supply sources came from Tay Ho, Ba Dinh and Tu Liem districts. The market is expected to become more active when a series of large serviced apartment projects go into operation in 2017.
Average asking rents were stable in both Grade A and Grade B offices in the quarter, standing at US$31.6 and US$22.6 per square metre per month, respectively. This will help new projects to apply suitable rents to attract tenants.
Tay Ho District reportedly has the highest rent rates, followed by Cau Giay, Ba Dinh and Tu Liem districts.