Investors are quite surprised because the number of people willing to spend 5,000 - 10,000 USD/m2 is increasing rapidly in Hanoi.
In the second quarter of 2019, only a handful of new projects like The Terra An Hung were launched.
According to the report of Real Estate Investment Newspaper, after a boom in the fourth quarter of 2018 due to the market access of two large projects Vinhomes Ocean Park Gia Lam and Vinhomes Smart City Nam Tu Liem, since the beginning of the year. In 2019, Hanoi real estate market has not recorded many newly launched projects.
Some notable new projects launched in the first half of 2019 include The Zei of HD Mon Holdings, The Legacy of Housing Investment and Development Joint Stock Company No. 41, Stellar Garden of the Joint Stock Company. Business and Construction Quang Minh, Bea Sky of Dai Dong A Investment Joint Stock Company, Imperia Sky Garden of MIK Group, Hanoi Golden Lake of Hoa Binh Company Limited (Hoa Binh Group) and the latest The project Terra An Hung of Van Phu Invest.
The rest, most of the launches in the second quarter of 2019 mainly came from old projects such as Roman Plaza of Hai Phat Invest, Eurowindow Riverpark of Eurowindow Holdings, Bamboo Garden of CEO Group, Vinata Tower of Vinaconex - Taisei, especially 2 projects of Vinhomes...
Demand for buying houses is still very large
JLL statistics recently show that, in the first 6 months of 2019, the supply in Hanoi market was only over 18,000 apartments. In particular, in the second quarter of 2019 alone, the number of apartments opened for sale in Hanoi was only over 4,660 units, 65.3% lower than the previous quarter and the lowest level since the market recovered in the 2014. The main reason is due to the longer approval process of construction approval.
"Strict government policies have adjusted supply to a more sustainable level. In particular, many projects are required to fulfill land-related legal obligations and construction permits before opening for sell” JLL explained.
In fact, the real estate supply decline has been warned before the Vietnam Association of Real Estate Brokers. There has not been an official update on the market, but through preliminary statistics from the member trading centers belonging to the Association, it shows that the number of products in Hanoi for distribution in many exchanges is currently not much, even In some markets, products are mainly from other localities, while products in Hanoi are not for sale.
Talking to reporters of Real Estate Investment Newspaper, Mr. Nguyen Van Dinh, Standing Vice President and General Secretary of Vietnam Real Estate Brokers Association said that due to the Government's policy related to the approval process of land and construction permits are tightening, future supply is expected to decline sharply. In the context that the process of waiting for construction approval continues to be delayed, the number of open sales expected in 2019 will fluctuate quite sharply.
Great consumption, price increases
The number of newly launched projects, while demand is still high, the number of apartments in the market increased sharply in the middle and high-end segment. Specifically, according to CBRE's Q2/2019 update report, while purchasing power of luxury apartments decreased by 26% QoQ and affordable purchasing power by 33% QoQ, the number of luxury apartments sold in the second quarter reached 675 units, increasing 37% QoQ and the mid-end segment reached 4,566 units, increasing 37% QoQ.
"This is the first time in more than a year that the number of apartments sold has exceeded the number of new launches. Specifically, the number of units sold reached 7,500 units, while the total number of new launches was just over 6,000 units", Ms. Nguyen Hoai An, Director of CBRE said.
According to Ms. An, currently, the strong urbanization process has spurred the expansion of the housing market beyond the radius within 10 km on all 4 sides of Hanoi.
Sharing the same view, JLL said that good sale rates were recorded across all segments. In particular, buyers have to compete to be able to buy good quality terraced houses due to a shortage of supply. Sales of terraced houses reached 772 units in the second quarter, 22% higher than the number of new launches. The ratio between the number of people booking 3 times the actual volume of adjacent houses and commercial townhouses is priced from 170,000 - 250,000 USD/unit (equivalent to 4-6 billion VND/unit). Demand remained high, stemming from both the demand for accommodation and rental.
The low supply and high demand make real estate prices tend to increase. Specifically, JLL said that the selling price per project remained stable or increased slightly after a period of strong growth. The market average price excluding new projects in the second quarter of 2019 increased by 0.5% QoQ and 6.9% YoY.
According to Mr. Nguyen Vinh Tran, General Director of MIK Group, a thorough review of legal documents made the supply on the market scarce but this was a really necessary move. After a few years of overheating of the apartment market, the quality of the project as well as the apartment was affected, the review was in some way positive for the market. The quality control of the project would minimize risks for customers, avoiding disputes after the project was put into use.
Mr. Tran said that the decrease in supply caused prices to rise, but the psychology of homebuyers in Vietnam today much more open than before. Recently, many people can accept the price that previously the real estate developers themselves, investors did not think about.
“Nowadays, many people are willing to spend money to buy houses with the price of 5,000 - 10,000 USD/m2 or 30-50 billion to buy a villa. Actually this also made us quite surprised” Mr. Tran evaluated and said that the issue of selling price is not a story that is so important to the real estate market as before. In the market, the segment from affordable to high-end always has a certain percentage of customers, which always has good liquidity.
However, home buyers are now very smart, they understand the market, the product and the selling price. They are the ones who decide so it is appropriate to buy it. Therefore, for real estate developers, always try to create products that suit the tastes and needs of customers, including buyers to stay and buyers to invest,... To develop a project in the current period requires a lot more factors than before, it does not stop at the price story but more importantly the living space.
According to Viet Trang