Savills: Segment of apartments for sale quietly; villas, adjacent houses in Hanoi "ascended the throne"

Savills Vietnam has just released a report on the Hanoi real estate market in the second quarter of 2019 with some interesting features.

The second quarter recorded a strong rise of the villa/townhouse segment. Photo: Thanh Nguyen.

Specifically, with the retail segment, the non-CBD area dominated with many new projects. The total supply reached about 1.5 million m2, increasing by 7%, 14% QoQ and YoY respectively. Occupancy rate increased by 1%, 0% QoQ and YoY respectively. Retail sales increased by 14% year on year. In the second half of 2019, the market will have about 142,000 m2 of supply.

In the office segment, the total supply reached approximately 1.8 million m2, increasing by 2%, 9% QoQ and YoY respectively. Rents also increased by 1%, 3% QoQ and YoY respectively. Annual occupancy was stable and slightly up, 1% QoQ.

In particular, Grade B was the dominant segment in the office market and had the strongest price increase in 3 grades. The West continued to record better growth, compared to the central and urban areas.

The hotel segment was a bright spot although it was currently the low season. The current supply was approximately 10,000 rooms, stable on a quarterly basis and decreased 1% year on year.

The number of international tourists coming to Hanoi increased by 10.6% to 3.3 million, which significantly improved the rental performance of hotels. Q2 capacity reached 73% (60% higher than HCMC).

Hotel rents steadily increased in all grades. 3-star hotels increased by 12%. 4 and 5-star hotels increased by 4%. 5-star hotel worked particularly well with an average rental price of 127 USD/launcher/night. 5-star hotels in the West area always achieved over 80%, sometimes reaching over 90%.

The serviced apartment segment has an average rental price of 25 USD/m2/month, stable on a quarterly basis but increased 3% year on year, average occupancy decreases by 2%, 5% quarterly and yearly. In the last 6 months, Hanoi will have about 950 more units.

The segment of apartments for sale is recording certain calmness. New supply was added 6,600 units, decreased 32%, 33% QoQ and YoY respectively. Total units sold decreased 3% QoQ but increased sharply 27% YoY.

In particular, Grade B leads when it accounts for 71% of supply, followed by Grade C with 28%. Savills forecasted that approximately 30,000 apartments would be offered for sale in the second half of the year.

Contrary to the quiet of the apartment segment for sale, the villa and townhouse segment performed very well. The total supply of the whole market reached over 49,000 units, increased 3%, 15% quarterly and yearly respectively.

In the second quarter, there were 3,300 additional units, increased 9% QoQ and decreased 3% YoY. Transaction volume also increased sharply by 82% year on year, absorption rate reached 64%.

Looking at the market picture, Ms. Do Thu Hang, Head of Savills Hanoi Research Department, commented that big real estate and infrastructure projects were greatly affecting the investment situation in areas of Hanoi. 

For example, the Lotte Mall Tay Ho project has helped increase the region's premium level, as it is a large-scale project with many high-end services. Similarly, when Aon Mall comes into operation, it will also add value to the Ha Dong area; Although F1 race has just been started, it is improving for projects in the West of the city; Meanwhile, the Smart City project or Vinh Tuy Bridge phase 2 will contribute significantly to the northern and southern areas of Hanoi.

According to Thanh Nguyen