CBRE released quarterly property report

Residential

illustration photo

The first quarter of 2011 welcomed a significant new supply of 8,200 condominium units, equivalent to more than half of total new supply in 2010.

Vincom’s projects, Royal City and Times City, accounted for more than 50 per cent of new supply this quarter. 

The sales rate of the high-end segment has improved considerably relative to 2010. Newly launched high-end projects attained good sales rates. Sales rates of earlier launched projects also picked up this quarter, but at a lower rate relative to their recent competitors. 

Notably, while in 2010, projects sold above $1,500 per square metre generally had slow sales, no such clear-cut price point exists in the first quarter of 2011.

Buyers are being increasingly selective and aggressively comparing prices against other factors such as location, developer’s reputation, design, quality and facilities, before arriving at the final purchasing decisions.

Asking prices in the secondary market remained stable overall, with the exception of the mid-end segment, which experienced good price appreciation of 8.5 per cent quarter on quarter.

This stable price trend is expected to continue in the second quarter of 2011, given the continuing large expected supply of 4,000 units and subdued demand. 

The landed house market in Hanoi continued to be a favoured investment channel in the first quarter of 2011, especially in current economic conditions  and with the large new supply of the condominium market.

For these reasons, price increases were observed in many township projects, in addition to the reason of infrastructure being completed.  

The current economic conditions have had some impact on the development progress of many township projects. Difficulties in accessing capital have translated to construction delays.

Office

Three new Grade B office projects, Hoang Cau Geleximco, Crown Complex, and TTC Tower launched in the first quarter of 2011. These three projects brought nearly 47,000 square metres of new supply to the market.

Asking rents across all grades fell slightly this quarter. Grade A asking rents were at approximately $39-$40 per square metre (psm) per month and Grade B at $26-$27 psm per month.

Vacancy dropped in Grade A buildings to 9.6 per cent, and rose slightly in Grade B buildings to 18.7 per cent.

Demand was strong in the first quarter of the  year. Total net absorption was 37,800 square metre (sm), the highest level of absorption to date.

Approximately 25,250sqm was taken up in Grade B buildings. 12,550 sm was absorbed in Grade A projects, mainly in the Western submarket.

In 2011, over 383,000 sm of new supply will enter the market. Approximately two-thirds of new supply will be in the West.

The launch of Keangnam Hanoi Landmark Tower with 159,000sm office space will be a remarkable event of Hanoi office market in 2011. 

Retail

Total stock of modern retail spaces in Hanoi decreased by 11.8 per cent in the first quarter of 2011 compared to the previous quarter, to 104,480 sm as Trang Tien Plaza temporarily closed for renovation.

More new high-end and luxury tenants are anticipated to enter the market. 

The retail market was busy with a number of projects launching and beginning leasing activities this quarter. Savico Mega Mall in Long Bien district and Mo Market in Hai Ba Trung district both held tenant launches in March 2011. 

MelinhPlazaannounced its plans to locate in Ha Dong. Vincom also revealed their aggressive plan to introduce ten shopping centres nationwide with total of more than one million sm in the next five years.

In the Centre Business Districts (CBD), Trang Tien Plaza’s temporary closure put the pressure on rental rates, resulting in a 3.9 per cent increase in this submarket. Outside of the CBD, rental rates continued the downward trend from last quarter, which can be explained by rent discount policies offered by Grand Plaza and The Garden. 

Second Home Market

The second home projects in the northern region are located primarily in five provinces and cities, including Hanoi, Haiphong, Hoa Binh, Quang Ninh, and Vinh Phuc.

In the first quarter of 2011, a number of projects were launched, offering a total of 300-400 units. These projects included Flamboyant Islands (Do Son commune of Haiphong city), Ngoc Vien Islands (Dong Mo, Hanoi), and Zen Resort (Ba Vi commune of Hanoi). Prices of second homes were on an upward trend on a year on year basis but no price fever was recorded. 

To date, no second-home project has been fully completed. In the next two to three years when the first projects are completed, their performance and prices will influence future market’s trend.

In addition, good-quality finished products with professional management will receive more attention besides the purchases of land lots.