Hanoi Realty in QI: Almost All Market Segments Grow Strongly

In the first quarter, the market received a quite huge supply with 8,200 apartments, equaling to over a half of the total supply in 2010. The two projects of Vincom Corporation, namely Royal City and Times City, accounted for 50 per cent of the total. The middle-ranking segmentation had the highest number of offered apartments. Regarding the location, Ha Dong district lost its top position to the districts of Hai Ba Trung and Thanh Xuan because of the introduction of Times City and Royal City projects.

 

 If last year real properties offered at the price which was higher than US$1,500 per square meter were sold slowly, the situation did not exist in the first quarter of 2011. Buyers often compared carefully the sum they would pay with the apartment’s values, including the location, investor’s reputation, design, quality and benefits, before making their final decision.

 

 The real estate market in urban areas in Hanoi continues to be the most favorite investment channel in the first quarter, particularly in the context of the economic fluctuation and big supply of apartments. These reasons, plus with the construction and completion of infrastructures in many areas, pushed up the sale prices of many realty segmentations.

 

For the market of grade B offices for lease, in the first quarter of 2011 there were three new projects of Hoang Cau Geleximco in Dong Da district, Crown Complex and TTC Tower in the western region. These projects contributed nearly 47,000 square meters to the market of offices for lease. Thus, lease prices of all segmentations reduced lightly in the first quarter. The rental price for grade A offices stood at US$39-US$40 per square meter per month and US$26-US$27 per square meter per month for grade B offices. While the rate of vacant offices for grade A ones reduced to 9.6 per cent, the rate for grade B offices increased to 18.7 per cent. 

 

The demand of offices for rent dropped down in the first quarter. The first quarter’s rented area reached 37,800 square meters, the highest of its kind up to now. Of the total, 25,250 square meters were grade B offices and the remaining of 27,550 square meters were grade A offices, mainly situated in the city’s western area. 

According to the predict statistics of CB Richard Ellis Viet Nam Company (CBRE), over 383,000 square meters of total floor area (GFA) will be put into operation in 2011. Of the total, two third will be in the western area. Keangnam Hanoi Landmark Tower with total 159,000 square meters GFA will be the center of Hanoi’s office for rent market in 2011. 

 

CBRE Vietnam General Director Mark Towsend said that with a large number of offices for rent added to the current supply, lessees will have more choices for high-quality offices this year. Lessees who signed lease contract in 2008 for a three-year duration will have various choices. They can extend the contract or moved to another which is more modern than in the centre areas of Ba Dinh, Dong Da or in the western region. The demand of offices for lease is very big, particularly from companies operating in the fields of bank, production, electronics and telecoms with the possible duration for two or three years. Meanwhile, for investors this year is considered to be full of challenges and fierce competition.

 

According to the CBRE, the supply for retail space in the first quarter reduced by 11.8 per cent against the fourth quarter of 2010, to 104,480 square meters due to the temporary break of Trang Tien Plaza trade center for upgrading. The upgrading work, as completed, can help the Trang Tien Plaza keep the top position in the retail space market, attracting many high-grade lessees.

 

The demand for retail space became effervescent because there were a series of projects being put into operation or offering in the first quarter. For example, the project Savico MegaMall in Long Bien district and the trade center Mo Market in Hai Ba Trung district both opened and offered to lessees in March. Meling Plaza also announced the plan to open another branch in Ha Dong district. Vincom already outlined a big project of bringing ten trade centers, trademarked Vincom Center and Vincom MegaMall, into operation nationwide in next five years, with total GFA of up to one million square meters.

 

The supply of apartments for rent in Hanoi continued to increase in the first quarter. The Hoa Binh Green Apartments project put into operation provided additional 50 apartments for the market’s segmentation. The Hoa Binh Green Apartments is the fourth one of its kind in Hanoi managed by the Ascott, a Singapore-based owner-operator of serviced residence properties. 

 

The rental price of apartments in some project rose, attributing to an average increase of 2 per cent based on the rental price per square meter and 8 per cent based on the rental price per apartment. The occupancy rate was improved significantly against the previous quarter and the same period of last year. If not including the newly-run projects of Gran Plaza and Hoa Binh Green Apartments, the whole market’s vacation rate was 5.7 per cent, down from 7.2 percent in the fourth quarter of 2010. Some old blocks were also upgraded, contributing more apartments to the supply, for example Fraser Suites with 16 added ones. 

 

Mark Towsend said the market of apartments for rent will continue to welcome more new projects in the next quarter. The number of lessees who are new companies or those who come back the Vietnamese market will help push up the supply. However, he also noted the apartments for rent will face strong competition from the segmentation of apartments which are bought to put out to lease.