Huge office and condo supply

A report released by Savills Vietnam last week indicated from the second half onward, Hanoi will have 1,470,000 square meters of office space at 129 projects. Of which, 35 new projects will supply 544,000 square meters by the end of 2017, an increase of 36% compared to the current level.

Meanwhile, CBRE Vietnam said eight new office buildings will be up and running in the capital city in the second half of this year with a total of nearly 240,000 square meters.

Besides, Savills Vietnam said 26 projects with 12,600 condos are expected to come online in the city by the end of 2015.

This year, around 25,000 condos will be launched onto the Hanoi market versus 7,000 units last year and 5,000 in 2013. The city still has 5,000 apartments in stockpile compared to 9,000 units in 2014 and tens of thousands of condos in 2013.

Condo and office supply is projected to rise strongly in the coming years as property developers have invested in new projects to capitalize on high demand, experts said.

Strong condo sales

According to Savills Vietnam’s report, 27 condo projects, including 15 existing and 12 new apartment projects, were launched in Hanoi in the second quarter of 2015 with 6,100 units. Besides, some 13 new projects still in the early stage of construction have launched informal sales of 1,340 units.

The primary price increased 1% against the first quarter, whilst the average secondary ask price went up by 2%. In some districts (such as Tay Ho and Hoan Kiem), secondary prices rose by 7% quarter-on-quarter.

Condo sales in the first half of this year surpassed 10,000 units. There were 11,500 apartments sold in 2014 and 5,000 in each of 2012 and 2013.

Meanwhile, CBRE Vietnam said that condo sales at new projects in Hanoi surged 93% year-on-year in the second quarter. Notably, high-class apartments sold for the first time made up one-third of the total.

In the first six months, high-class condo sales accounted for around 22% of the total deals, above the 6% in 2013 and the 18% in 2014, while that of low-cost apartments dropped to 26% (compared to 49% in 2013 and 33% in 2014).

High sales reflected buyer confidence. Off-contract premiums appeared in many projects, even in projects only at the stage of foundation construction.

Financial guarantees from banks for housing projects were one of the most important motivations for buyers. Bank credit became the main financing source for both end-users and investors, Savills Vietnam said.

Sales are expected to remain at a high level in the rest of the year. However, there could be elements of speculation distorting the overall demand, it said.

Besides, the average office rent in the second quarter was VND394,000/square meter/month, stable quarter-on-quarter but increasing 2% year-on-year. Grade A and Grade B’s average rent declined 0.3% and 0.9% against the first quarter respectively while Grade C’s average rent increased 0.7%.

The average occupancy was 81.4%, stable against the previous three months and up six percentage points year-on-year. Grade A and Grade C increased 0.4 percentage point and 2.2 percentage points respectively but Grade B decreased 1.9 percentage points.    

SGT