Savills Vietnam reports on Hanoi real estate market Q4/2018

GDP growth reached 7.1%, bolstered by strong manufacturing and exports. The expansion of the service sector was robust, supported by private consumption and record tourist arrivals. National retail sales of goods increased 12% YoY to US$145 billion.

Total export value in 2018 exceeded US$244 billion, resulting in a trade surplus of US$7.2 billion. FDI sectors accounted for over 70% of export value, the US remained the largest market.

Although total registered FDI slightly decreased -1% YoY, disbursed FDI in 2018 increased 9% to over US$19 billion.

1. RETAIL: NEW PROJECTS INCREASE RENT

Total stock was approximately 1.4 million m², up 3% quarter-on-quarter (QoQ) and 6% year-on-year (YoY) after the entry of three shopping centers in the Secondary area.

Average ground floor gross rent continued its upward trend of 3% QoQ and 17% YoY whilst occupancy was slightly down -3 ppts QoQ and -4 ppts YoY. The retail podium segment had the most improved performance.

Sixteen new projects are expected to launch in 2019, providing nearly 285,000 m²; including projects with substantial scale of nearly 100,000 m² each.

2. OFFICE: BRIGHT FUTURE

Stock was stable QoQ at nearly 1.7 million m2. Grade A supply remained unchanged whilst Grade B welcomed two new buildings.

Overall market performance remained stable QoQ and YoY, the most significant change was a 3% YoY increase in average gross rent. Improved Grade A performance in non-CBD areas resulted in an upward trend overall despite a slight QoQ reduction in CBD rent.

There will be new supply of approximately 500,000 m2 until 2020. Five Grade A projects are expected to enter in 2019.

3. SERVICED APARTMENT: GRADE B DECLINES

A total of 48 properties provided 4,600 units due to a new Grade A project and the closure of two Grade B projects. From 2019-2020, 1,100 units from nine projects will enter.

Overall market performance increased slightly QoQ. Average rent was US$25/m²/mth, up 5% YoY, whilst average occupancy remained at 86 percent. Grade C decreased -14% in supply and -17% in rent. Registered FDI to Ha Noi was US$7.5 billion, Japanese investors accounted for 29 percent.

4. APARTMENT: RECORD-BREAKING NEW SUPPLY

Eight new projects and the next phases of 28 projects provided approximately 15,100 units, up approximately 120% QoQ and YoY.

Transactions rose by 81% QoQ and 69% YoY whilst the absorption rate increased by 9 ppts QoQ and 5 ppts YoY to 34 percent. The average asking price was US$1,370/m², up 3% QoQ and 10% YoY. Grade B accounted for 61% of stock, followed by Grade C with 31 percent.

In 2019, more than 41,300 units will enter from 36 projects, most will be Grade B.

5. HOTEL: RECORD-BREAKING NEW SUPPLY

Hotel stock decreased -1% QoQ and YoY due to the withdrawal of one 3-star hotel.

Average occupancy slightly increased 1 ppt QoQ but decreased -2 ppts YoY.  Average Room Rate (ARR) was up 14% QoQ but stable YoY. Average revenue of five-star hotels was US$116/room/night, double that of four-star and triple that of three-star.

According to the Ha Noi Statistics Office, in 2018 there were approximately 5.7 million international visitors to Ha Noi, a 16% YoY increase.

In 2019, three new four- to five-star hotels will supply approximately 480 rooms.

6. VILLA / TOWNHOUSE: STRONG PERFORMANCE 

Four new projects and nine new phases supplied nearly 2,350 dwellings. Transactions increased 21% YoY and absorption was 40%, up 3.8 ppts YoY.

Gia Lam led with 52% of sales, followed by Dong Anh and Long Bien with nine percent each.

In 2019, projects including Athena Fulland by Vimedimex, Sunshine Wonderland by Sunshine Group and Vincity Sportia by Vingroup will enter.