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Apartment supply in Hanoi ‘to surge in H2’

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Apartment buildings in Ha Noi. The selling prices of real estate products are expected to remain largely unchanged in the second half of the year. VIET NAM NEWS/ANN

Apartment supply in Hanoi ‘to surge in H2’

The apartment supply in Hanoi is expected to surge in the second half of this year to meet higher demand in the segment, a real estate expert said.

In the second half of this year, about 24,200 units from four existing, and 18 future projects, will enter the Vietnamese capital’s market, with Grade B continuing to claim a leading share in the segment.

Do Thu Hang, director for advisory services at Savills Hanoi, the local unit of the UK-based real estate services provider, said this at a July 21 Savills Vietnam press conference on a report on Hanoi’s property market in the first half of this year.

Of the 22 projects announced, 68 per cent are under construction with 32 per cent at the foundation level. Leading future suppliers are To Liem district with 45 per cent of stock, Gia Lam with 32 per cent and Hoang Mai with nine per cent.

Hang said: “Grade B remains the driver, however, all classes have suffered short term demand pressure. Large supply handed over in 2020 may see rental yields soften. With abundant infrastructure being completed, long-term returns remain sound.”

However, urbanisation, strong population growth and shrinking households all contribute to residential property demand, she said.

This year, Vietnam’s urbanisation was 37 per cent – lower than Southeast Asia (50 per cent) and Asian peers (51 per cent). Lagging urbanisation implies strong future development potential.

Last year’s 96-million population is expected to surge to 120 million by 2050 with a national urbanisation rate at 57 per cent. The emerging middle class, currently accounting for 13 per cent, is expected to reach 26 per cent of the population by 2026, Savills said in its quarterly report.

Total households increased 1.8 per cent per annum from 2009-2019. Of which, each household had an average of 3.5 persons, 0.3 persons fewer than in 2009.

In line with Hanoi’s urban expansion, supply is shifting from urban areas to rural districts. In 2016, Hoai Duc and Thanh Tri districts provided 10 per cent of supply. In the second quarter of this year, Gia Lam, Dong Anh, Hoai Duc and Thanh Tri districts together provided a 27 per cent share. Strongly performing eastern districts in the first half of this year made suburban district sales account for 22 per cent.

The districts have future large satellite projects, including Xuan Mai Smart City (3,072ha), Vinhomes Co Loa (299ha), BRG Smart City (272ha) and Vinhomes Wonder Park (133ha).

Savills added that in the second quarter of this year, five new and the next phases of seven existing projects provided about 6,200 apartments, up 28 per cent quarter-on-quarter but down six per cent year-on-year.

Primary supply increased five per cent quarter-on-quarter but decreased by six per cent year-on-year to 29,200 units. Accounting for 74 per cent, Grade B remained the largest supplier.

Increased developer and buyer confidence accelerated new project launches and second-quarter performance. There were about 5,400 sales, up 11 per cent quarter-on-quarter but down 43 per cent year-on-year.

In the first six months of this year, the market had about 10,300 sales, down 47 per cent year-on-year with a 30 per cent absorption, decreasing 17 percentage points year-on-year.

Pandemic effects made sales difficult in the first six months but average primary prices remained stable quarter-on-quarter and moved up seven per cent year-on-year to $1,460 per square metre.

Meanwhile, Savills saw Ho Chi Minh City market’s primary stock in the first half of this year down 52 per cent year-on-year to over 9,100 apartments, to a five-year low.

The long Tet (Lunar New Year) holiday followed by the pandemic has severely affected developer planning. Supply in the second quarter of this year from four new entries and 10 next phases totalling 2,100 units, plunged 55 per cent quarter-on-quarter and 74 per cent year-on-year.

Sales in the first half of this year in Ho Chi Minh City fell 55 per cent year-on-year, to just over 6,800 units, the lowest in five years. Grade C performed best with up to 84 per cent absorption while contributing 64 per cent of all sales in the first half of this year.

The three new Grade C projects each achieved over 80 per cent absorption. Overall demand was positive with 75 per cent absorption slightly easing four percentage points year-on-year.

VIET NAM NEWS/ASIA NEWS NETWORK

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