Hanoi housing prices predicted to level off in 2012

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Báo QĐND English - 36 month(s) ago 5 readings

Hanoi housing prices predicted to level off in 2012

Approximately 36,000 apartments in Hanoi are for sale this year, 16,000 of which were offered for sale last year and 22,000 are new on the market.

CB Richard Ellis (CBRE) Vietnam Property Services recently predicted brighter prospects for Hanoi’s property market this year, saying that more investors will be able to capitalise on opportunities available in Hanoi's real estate market this year, as last year's tough market begins to ease.

At the firm’s fifth annual “Fearless Forecast” presentation held in Hanoi recently, CBRE Vietnam Managing Director Marc Townsend said, “For some people, companies and individuals, 2012 will be the year when Vietnam finally becomes a reality. If you've been listening to me and CBRE's research, you know that certain sectors have seen prices falling and in some sectors prices have been declining for over three years. There has been pain in the market with cash flows being challenged as restrictions on capital flows were put into place and buyer appetites faded."

But he noted that rising auto sales suggested that Vietnamese consumers had money to spend. In regards to the property market, people are simply sitting on the sidelines. The price of gold is at an all-time high, and when that starts to fall, people will move out of gold and capitalise on their profits by going into real estate, Townsend said.

Although the rate of home sales in Hanoi has been significantly lower than in previous years (currently 45 percent as compared to 80-100 percent previously) due to a large new supply, the actual number of units sold was not below the historical average, suggesting potential demand.

Mirroring the growth in sales of medium range cars, CBRE Vietnam expects more affordably-priced residential sectors, targeted at the growing middle class, to perform the strongest.

Meanwhile, Townsend said, Hanoi's infrastructure in on its way to the next level. In the next four years, different areas of the city will be conveniently connected by new elevated highways, metro lines, and additional bridges. By then, the psychological barrier of traveling to the other bank of the river or to certain suburban districts will be lifted, bringing people and buildings closer.”

He predicted that prices in the Hanoi residential market would start to level off, following the trend in HCM City over the last few years. The prices in the secondary apartment market in Hanoi experienced a sharp increase over the past three years while prices in HCM remained quite stable.

For the time being, there are quite a lot of infrastructure projects underway in Hanoi and once completed, the capital will benefit from transport and property values.

Regarding the market for retail space, Townsend noted that shopping centres in Hanoi will face fierce competition. The new supply available in 2012 will mean more competition and more vacant retail space.

New supplies of property will also be on the market in the west of the city. For example, 128,000 m2 of new office space was built in western Hanoi in 2011, bringing the amount of vacant office space to a record high of 48 percent in the city and 27 percent across the entire country.

To fill up the large amount of vacant office space in the western part of Hanoi and the 200,000 m2 to be built in 2012, office rentals are predicted to go down to encourage customers to change or expand their offices. Therefore, it will continue to be a renters' market for office space in the near future.

Townsend also predicted that the vacancy rate for hotel construction projects and apartments for lease in the western area will increase due to the large supply in 2012. However, he argued that local hoteliers will continue to be active in mergers and acquisitions, while international hoteliers will maintain a long-term interest in the Hanoi market.

"The past 12 months have seen the growth of the institutional investment deals in Vietnam, with notable transactions occurring among foreign investors. We believe that these deals will pave the way for further activity in the years ahead, with 2012 being no exception”, he said.

With developers facing cash flow problems and many properties already viewed as distressed, Townsend said the current market offers a good opportunity for foreign investors, which should help Vietnam attract more foreign direct investment (FDI) this year.

Source: VOV

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