Savills reflects on 2010

>> Property sector to offer more variety

According to Troy Griffiths, national director, research and valuation of Savills Vietnam, growth in the two key cites of Hanoi and Ho Chi Minh continued strongly last year. 

“In 2010 opportunities in second tier cities emerged as urban drift and industry took hold.  Regionalisation continued to consolidate in centres such as Haiphong, Danang, Nha Trang, Dalat, Vung Tau and Can Tho,” Griffiths said.

Apartments for sale

According to the quarterly report done by Savills, Hanoi’s primary supply of apartments consists of approximately 4,700 units, coming from 22 active projects. The majority of primary supply was provided by Grade B projects, equivalent to 55 per cent of the total primary supply.

The secondary supply as of the fourth quarter of 2010 was approximately 39,300 apartments. Cau Giay and Tu Liem districts accounted for 40 per cent of the total stock.

Although this quarter received a large supply from thirteen new projects, primary projects showed quite a good performance in sales status in the fourth quarter of 2010 with 80 per cent of primary supply sold out.

Sales status of Grade B projects witnessed a better performance compared to the third quarter of 2010, at approximately 85 per cent, an increase of over 10 per cent against the previous quarter. Ninety-four per cent of Grade C units were sold out in this quarter 2010. Grade A projects showed poor performance in this quarter.

Savills commented that the demand for apartments in 2010 was still affected by many factors such as changing lifestyle preferences, a steadily increasing population, rising urbanisation, growing per capita incomes and changing family structure.

Based on the execution schedule and status of future known projects, Savills estimates approximately 19,000 units from over 30 projects will enter the primary market in 2011. Besides, another 120 projects are estimated to enter the primary market and may provide a stock of over 24,000 units. 

Villas and townhouses

In this quarter, Hanoi’s villa and townhouse market was studied in two zones: Zone 1 consisted of Hanoi’s original nine districts, and Zone 2 included five newly expanded districts. In total, there are approximately 12,300 villas and 15,500 townhouses coming from 86 projects.

Sixty per cent of the total secondary market supply is in Zone 2. Ha Dong district retained the greatest market share by delivering 8,300 villas and townhouses, equivalent to more than 35 per cent of Hanoi’s total market supply.

The prices are those quoted in the secondary market, as most of the current projects were sold out before the fourth quarter 2010.

Generally, the price of both villas and townhouses continued to increase against the third quarter 2010 and varied significantly across Hanoi. In Zone 1, Cau Giay district retained the highest prices for both villas and townhouses due to its better technical and social infrastructure.  

“This confirms that the development of Hanoi is strong along the main axis roads such as Thang Long Boulevard and Highway No. 32,” the Savills report stated.

In the time to come, the consultant commented that villas and townhouses were considered a sound investment channel, especially in the long-term.  

Potential buyers of villas and townhouses are generally from more affluent backgrounds. 

It is estimated that 69 future villa and townhouse projects will come online in the medium term. Projects located in Zone 2 seem to have larger scale because of land availability.

Retail segment

Total retail space in the market in 2010 was approximately 431,000 square metres, provided by 130 projects, including 13 shopping centres, department stores, hypermarkets, 67 supermarkets,  34 electronic marts, two wholesale centres and 14 retail podiums.

Two electronics marts (Pico Xuan Thuy and Ebest) and a supermarket (M10 Mart) entered the market in the last quarter of 2010.

The performance of the retail market was stable quarter-on-quarter. The average occupancy for the whole market was 93 per cent, a decrease of only 1 per cent compared with the third quarter in 2010.

The rental rate of retail space ranges from $6 to $185 per square metre. Retail podiums in the central business district (CBD) have achieved the highest rate.

Retail space for long-term lease becomes a new investment channel for both investors and individuals.

In the fourth quarter of 2010, Mo Market Commercial Centre and Keangnam projects offered customers retail space for long-term lease (50 years or less).

In 2010, total retail sales of consumer goods and services in Hanoi increased 30.5 per cent year-on-year, in which retail sales increased 31.2 per cent (excluding a 21.5 per cent price increase). Hanoi is the wholesale centre of the northern area with sales accounting for 77 per cent of total retail sales.

Savills anticipates that demand for retail will increase in 2011 due to positive factors such as stable economic growth, rising incomes, higher disposable income, natural demographic growth, young population and Hanoi’s high urbanisation rate.

The retail market may have a large new supply generated by approximately 150 future projects. Most of these projects are located in non-CBD districts such as Cau Giay, Dong Da, Thanh Xuan and Tu Liem.

In 2011, Hanoi expects a new supply of 116,000 square metres from 12 projects to come online, of which three are planned to come into service in the first quarter of 2011.