Hanoi’s real estate market sees prospects in coming times: Savills Vietnam

Hanoi (VNA) - The real estate market in Hanoi is gradually recovering and may see a lot of development prospects in the time to come, according to analysts from property consultation company Savills Vietnam.

The market showed signs of recovery in commercial leasing activities, serviced apartments, housing purchases, and hotel room rental capacity.

In terms of the retail market, supply is assessed as being underactive. Demand for retail space is focused mainly on supermarkets, convenience stores, healthcare services, and food and beverage outlets. Meanwhile, fashion and cosmetics show signs of slowing in terms of demand.

In the first half of this year, Hanoi's economy grew by 7.8%, a rise of 29% year-on-year and higher than the 7.2% increase in the first half of 2019. Total retail sales of goods and services reached 14.6 billion USD, up 16.5% year-on-year.

However, the rental space market was not very good, as occupancy decreased by 3 percentage points on-quarter, and 4 percentage points on-year, reaching 89%. The capital city’s western region reported the highest increase in the additional rental area, reaching 30,600sq.m. The retail podiums saw the highest increase in leasable area, reaching 12,200sq.m, continuing to account for the highest proportion.

Forecasting the market in the coming time, Savills experts said that Vietnam's economy has recovered flexibly since the beginning of the year, affecting the performance of the real estate market in the coming time. Thereby, the retail segment will continue to grow in the second half of 2022, with retail podiums accounting for 69% of the total future supply, and shopping malls 31%.

Hoang Nguyet Minh, director of Commercial Leasing at Savills Hanoi, said the demand reflects consumers' confidence in disposable income.

The hotel market in Hanoi is seeing encouraging signs, with average occupancy up by 16 percentage points year-on-year. The 31st Southeast Asian Games (SEA Games 31) in May helped attract tourists to the capital city, including 700,000 domestic visitors and 31,000 foreign ones, and 5-star hotels saw significant demand from athletes and tourists alike.

Results in the second half of 2022 are anticipated to be even better, as the effect of the COVID-19 pandemic has begun to ease and tourist confidence is slowly returning.

Matthew Powell, Director of Savills Hanoi, stated that the tourism market is recovering and many hotels in the capital city are therefore posting high occupancy rates from the return of business and domestic visitors.

The villa market in Hanoi will welcome more than 2,131 new units from 13 projects to the end of the year, but these projects are facing a hard fact that buyers are losing interest in the city’s housing market.

Sales prices are currently quite high while supply is limited, leading to a low absorption rate, said Powell, adding that transactions are mainly in the secondary market, among the investors. Once supply at a more reasonable price returns, liquidity and operational conditions will improve, he added

Demand for apartments is strong in Hanoi, as its population is expected to hit 9.8 million by 2030 and its gross regional domestic product (GRDP) in the 2026-2030 period forecast to reach 8.5%.

Its apartment market will continue to be active, as 14 new projects and the next phase of two existing ones will supply some 11,726 units to the market in the second half of this year.

According to Do Thu Hang, Senior Director of Advisory Services at Savills, financial requirements are changing, while issues of legislation and border openings have been addressed. When apartment supply becomes abundant in the future, sales prices will be adjusted to ensure a stable and sustainable market, she added./.