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.