Savills Vietnam reports on Hanoi real estate market Q3/2017

12 October 2017

SAVILLS VIETNAM REPORTS ON HANOI REAL ESTATE MARKET
Q3/2017

GDP increased 6.4% year on year (YoY). There is a positive expectation the 6.7% annual growth target will be achieved.

Credit growth is boosting economic performance. Now at 11% and on line to achieve 21% by year end.

A registered FDI high of US$25.5 billion, up 34% YoY. Korea is back to the biggest source status with US$6.3 billion. HCMC projects registered US$3.7 billion FDI and lead major cities. US$12.5 billion was disbursed, 13% up YoY. International arrivals increased 28% YoY to 9.4 million.

1. RETAIL: Continuous Improved Performance

Total retail stock was nearly 1,280,000 m², up 0.4% quarter-on-quarter (QoQ) and 7.4% year on year (YoY) with one project reopening approximately 32,000 m².

Average ground floor rents increased 2.9% QoQ and occupancy maintained its upward trend with 3.5 ppts QoQ growth. Shopping centres and retail podiums saw improvements in rents and occupancy.

Retail sales steady growth continued. Long term prospects for the economy remain positive. Four new projects are scheduled for Q4 launch and eight more will enter in 2018 providing over 234,000 m².

2. OFFICE: Reduced Supply & Increasing Occupancy

Total office stock was approximately 1,590,000 m2, down -1.7% QoQ and -2.8% YoY after three projects withdrew and one closed for renovation.

Average rents decreased -0.1% QoQ but increased 1.3% YoY while average occupancy increased 0.7 ppts QoQ and 6.5 ppts YoY. Of the three grades only B had improved performance.

Investment remained strong and numbers of newly-established enterprises increased 14 percent. Two new projects in Q4 and ten in 2018 will provide around 228,000 m2. Increasing supply pressure is expected in the West and Secondary areas.

3. SERVICED APARTMENT: Long Awaited New Grade A Supply

Total supply reached 4,200 units from 50 projects, up 2% QoQ and 10% YoY due to a new Grade A project coming online and one Grade C project closing. From Q4/2017, there will be approximately 1,885 units supplied from twelve projects with three more in development.

Average occupancy was 90.2%, down -0.5 ppts QoQ but up 2.5 ppts YoY. Average room rates (ARR) were VND566,000/m2/mth (US$24.8/m2/mth), up 0.7% QoQ but down -1.9% YoY. Total take-up was positive, largely due to the new Grade A project.

According to the Ministry of Planning & Investment in the first eight months of 2017, registered FDI to Ha Noi was US$1.74 billion. South Korea won back their largest inbound investor status with US$6.02 billion.

4. HOTEL: Low Season Affects Performance

One 5-star and two 3-star hotels together providing 509 rooms entered the market. Total stock was approximately 9,840 rooms, up 5% QoQ and 8% YoY.

The low season saw a -5 ppts QoQ decrease in average occupancy but overall up 7 ppts YoY. ARR decreased -1% QoQ but increased 26% YoY. RevPAR was down -8% QoQ but up 39% YoY.

According to the Ha Noi Statistics Office, in the first 9 months of 2017 there were approximately 3.5 million international visitors to Ha Noi, a 24% YoY increase.

Pressure is set to increase from 2018 onwards in Ha Noi with 36 projects coming online.

5. APARTMENT: Decreased Sales Performance

Thirteen new projects and the next phases of sixteen active projects provided 6,170 units, down 3% QoQ but up 41% YoY.

Grade B has continuously dominated sales. Affected negatively by the Ghost Month, there were 5,660 sales this quarter, down 17% QoQ but relatively stable YoY. Average absorption was 24 percent. Average asking prices were down across most grades to VND 28,432,000/m2 (US$1,247/m2).

Focus is clearly shifting to the more affordable housing segments with an increasing proportion of homebuyer demand.

In Q4 there will be 42 launches of mostly grade B and C projects.

6. VILLA | TOWNHOUSE: Decreased Performance

Total stock was 39,126 dwellings, increasing 3.5% QoQ and 16.9% YoY. Five newly launched projects and 4 new phases of active projects provided 1,107 dwellings, of which townhouses accounted for 62 percent. Long Bien district accounted for 66.5% of new supply, followed by Hoang Mai (10 percent)

In Q3/2017, there were 1,143 sales and townhouses accounted for 53% of the total. Total sales decreased 12.7% QoQ but were almost double YoY.

The absorption rate was 30%, down -3 ppts QoQ and +16 ppts YoY.

More than half of the 96 known future projects are in planning. From Q4/2017 to 2018, over 2,800 dwellings will be supplied.

Disclaimer

This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract, interested parties should not only rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of Savills has any authority to make any representations or waranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. © Savills Vietnam Co. Limited. 2017

 
 

Key Contacts

Dinh Huong Linh

Dinh Huong Linh

National Head of MarCom, Savills Vietnam

Savills Hanoi

+84 24 3946 1300 Ext 112