In 2009, the Hanoi real estate market attracted a huge amount of foreign investment capital. In 2010, the investment flow is expected to rise as many multinational companies have seen the opportunity in Vietnam, one of the highest-growing economies in the world. These are conclusions of CB Richard Ellis Company (CBRE) at a recent press conference on property market in Hanoi.
Richard Leech, Executive Director of CBRE, said: In 2010, Hanoi's GDP growth is expected at a double-digit rate. Hanoi, as a commercial centre of the northern region, will play an important role in promoting the development of surrounding provinces. With its continuous growth of housing demand, the rapid expansion of retail sector and the supply of offices with reasonable rentals for new businesses, Hanoi can completely obtain a high growth rate in 2010.
Retail space price is likely to rise
CBRE Vietnam said that in 2010, more international retailers will be present in Vietnam, making international brands and franchising more active. At present, high-grade international brands have quickly occupied last positions in downtown commercial centres while many restaurant chains will be quickly opened in major streets in the city. However, the supply of retail spaces will increase much, with only 38,500 square metres in 2010, leading to higher rental rates in the capital city.
In 2010, Hanoi will have 1,000 hotel rooms put into service, including two 4-star hotels in Hoan Kiem district, and two 5-star hotels on the west side of Pham Hung Road. The sales of rooms by these hotels will be a good measure to evaluate the “ripeness” of the new western centre of the city. The sales result depends heavily on the development of infrastructure projects like Lac Long Quan Street, Lang - Hoa Lac Highway, Road Belt 3 and other roads.
CBRE predicted that hotels along Pham Hung Road will have to cope with difficulties in at least two or three years until the area has stable development, the upgrading of the airport is finished and the surrounding infrastructure is completed. Despite existing problems, long-term prospects will be actually brighter.
Apartment and housing to be more stable
CBRE Vietnam said, although the economy is dragged down by the global economic crisis, apartment for lease market in Hanoi in 2009 still maintained a relatively low rate of emptiness at 11 percent while the average rent increased about 4 percent to US$29.7 per square metre per month.
In 2010, CBRE expected leasing activities in the first quarter of 2010 would be more active because more Asian tenants would come to Hanoi. However, rents will not continue to increase in all market segments because new supply sources will be announced and most of planned price increases occur only when projects change management systems or have renovation. Best projects will be more likely to increase rents while other projects will be forced to launch promotional programmes to reduce the risk of higher rate of emptiness.
As regards housing market, in the fourth quarter of 2009, the market liquidity has been significantly improved. Over 40 percent of the apartments offered for sale in 2009 were offered for sale at present (6,587 apartments). Compared with the period from 2003 through 2008 period, the number of apartments offered for sale in the fourth quarter of 2009 was larger. Speculations have pushed up prices of new projects in the early stages until the supply turns excessive. With existing or underway projects, especially in the west, the increase in prices is more stable.
The average price of medium and low-end segments increased 11 percent and 15 percent, respectively. The price was little changed in high-end segments. Looking back on the market development in the past quarter, sales may be greater than estimation as the supply of apartments, about 90 percent are priced under US$2,000 per square metre and two thirds priced are priced under US$1,500 per square metre. More importantly, the speculative supply was limited even when the market is overheated. Mr Richard Leech forecast that in 2010 housing demand will continue to rise but the price fluctuations will decrease significantly.
Luong Tuan
Vietnamese
