Apartment segment is going off the boil

Hanoi’s high-end apartment segment has become dormant and will be difficult to stimulate in the near future.

After seeing a green light in the third quarter, when all of  100 units belonging to Ciputra L at the 323 hectare Ciputra City, located at Tay Ho and Tu Liem districts, sold out within several days, the market fell back on hard times.

In the current market, there are several high-end apartment projects offered by primary developers in Hanoi such as the Indochina Plaza Hanoi, Keangnam Hanoi Landmark Tower and Habico Tower.

Last week, CBRE held a special sale to sell 100 units belonging to the $130 million Indochina Plaza Hanoi  in Cau Giay district.

Besides the offered prices being least $2,600 per square metre, customers  would be offered a  support package and discount from the developer.

The move was considered a significant effort by developers and consultants to raise up the market. However, only three units were sold.

Two weeks ago, another special sale held by Knight Frank to sell units in the Indochina Plaza Hanoi project found only nine customers.

Indochina Plaza Hanoi is a modern complex project with two residential towers of 390 luxury apartments, one block with 14,000 square metres of Grade A office space and a four-storey retail podium with 18,000sqm of shopping and commercial space.

The project’s first launch last November received a warm welcome from customers, when all of the 183 units, ranging from 93-290sqm, sold between $2,500-$2,600 per square metre, were sold out within one week.

However, since the second launch of the rest of the 207 units, held this April with prices of at least $2,800 per square metre, finding customers for the project had become difficult.

The similar gloomy situation happened to the Keangnam Hanoi Landmark Tower project in Pham Hung street.

Belonging to the landmark complex with a 70-story high-end office for lease and hotel building and two 47-storey apartment blocks with 900 units have attracted the special attention.

During the first launch in August 2008, with prices ranging from $2,700-$3,000 per square metre, hundreds of customers came to register and 300 units were sold out during several days. However, the number of customers has decreased. To date, even with reduced prices, about 20 per cent of the 900 units were still without buyers.

Hai Binh, the developer of the Habico Tower project located in Tu Liem district, offered 136 units ranging in size from 280 to 422sqm, from $1.1-$1.8 million each unit. Penthouses range from 375 to 788sqm, and the largest may sell for as much as $4.4 million.

The launch this August was not successful and then the developer sold the project to the Korean-backed Doosan Group. No more information about the project has been revealed since then.

Nguyen Xuan Dao, director of the Vietnam Property Company, said: “There are many people with enough money to purchase the units. However, the real demand for living in high-end apartments is not that high. People still consider purchasing high-end units as a sound investment. With the current status of the property market, if they have money, they will invest into mid-end units or townhouses, villas or landplots, which have higher liquidity.”

Phan Truong Son, director of the HUD3 Construction and Investment Company, said: “At the time, with money enough to purchase a high-end unit, people would still like to purchase a townhouse or villa in the central business districts or in new urban areas. The supply is higher than the current demand. Right now, it will be very difficult to see the real estate market heat up anytime in the near future.”