SAVILLS REPORT ON HANOI REAL ESTATE MARKET Q1/2017

Savills

Wednesday, 19 Apr 2017


In Q1/2017, GDP growth was 5.1%, lower on the same quarter last year by 0.4 ppt, mainly attributed to a shrinking mining industry and Samsung’s slowdown.
Registered FDI had strong annual growth of 73% with Korea contributing 48% and the Secondary sector drawing in 85 percent. Total FDI disbursement was up 3.4% year-on-year (YoY).

Viet Nam’s Tourism industry strongly benefitted from 3.2 million international arrivals, growing 29% over the same period last year.

1. RETAIL: Improve Occupancy but Lower Rents


In Q1/2017, the total retail stock was approximately 1,240,000 m², up 1.7% quarter-on-quarter (QoQ) and 11.5% YoY due to the entry of two new shopping centres, cumulatively supplying approximately 21,200 m².
Ground floor average rents decreased QoQ and YoY to a four-year low. Average occupancy increased 0.7 percentage points (ppts) QoQ but decreased -2.2 ppts YoY. While department store occupancy decreased -0.5 ppts QoQ, both shopping centre (0.9 ppts) and retail podium (11.5 ppts) occupancy increased.
Retail market performance

Growth and diversification of the Ha Noi retail sector continues, particularly with shop houses and convenience stores. Larger scale future developments such as Vincom D'Capitale and Aeon Mall Ha Dong will boost future supply.


2. OFFICE: CBD Grade A Continues to Perform Well
The total office stock was 1,640,000 m2, increasing 0.3% QoQ and 1.9% YoY. One Grade A project entered the market, supplying approximately 5,200 m2.
Average rents decreased -0.2% QoQ but increased 1.2% YoY. The average occupancy was up slightly. Grade A projects in the non-CBD had weaker performance than their CBD counterparts.
Office market performance

In 2017, five new mostly Grade B projects will supply approximately 158,400 m2. The future supply will remain concentrated in the West and Secondary areas.


3. SERVICED APARTMENT: High Occupancy, Lower Take-up
The total serviced apartment stock was 3,970 units from 48 projects, down -1% QoQ but up 7% YoY due to the entry of a new project and temporary closure of another for renovations. From Q3/2017, there will be an additional supply of approximately 1,490 units.
The average occupancy increased 4.1 ppts QoQ and 7.3 ppts YoY. The average room rate (ARR) increased 1.8% QoQ and 0.5% YoY. Total take-up decreased -20% QoQ to 136 units, a first quarter downward trend now in its third consecutive year.

Service apartment market performance

According to the Viet Nam Foreign Investment Agency, in Q1/2017 Ha Noi was fourth highest registered FDI recipient nationwide at US$574 million.

 

4. HOTEL: A Record 5-star Performance
The hotel market was relatively stable QoQ but down -4% YoY.
Hotel market performance

A strong 5-star contribution brought the average occupancy up 4 ppts QoQ and 10 ppts YoY. The ARR was up 21% QoQ and 41% YoY due to increases across all segments. RevPAR was up 28% QoQ and 64% YoY.
According to the Ha Noi Statistics Office, in Q1/2017 there were approximately 1.3 million international visitors to Ha Noi, a 10% YoY increase.
In 2017 more than 900 rooms will be launched.


5. APARTMENT: Strong Supply
The total primary stock was 24,160 units, increasing 12% QoQ and 49% YoY. Fourteen freshly launched projects and twenty one newly launched projects supplied 9,220 units, decreasing -10% QoQ but increasing 39% YoY.
There were approximately 6,520 sales, decreasing -2% QoQ but increasing 16% YoY. The absorption rate was down -4 ppts QoQ and -8 ppts YoY to 27% due to the large supply.
Apartment market performance

In 2017, approximately 40,800 units will come to the market, much will be Grade B from Ha Dong, Hoang Mai, Tu Liem and Thanh Xuan.

 

6. VILLA | TOWNHOUSE: The East Dominating New Supply
The total stock was 36,068 dwellings, increasing 3% QoQ and 14% YoY. Three new projects entered the market supplying approximately 1,005 dwellings, of which villas accounted for 58 percent.

In Q1/2017, sales were almost equally split between villa and townhouse totaling 579 dwellings, a -24% QoQ decrease but YoY improvement of 40 percent. The absorption rate was 21%, down -9 ppts QoQ and -3 ppts YoY.
More than half of the 78 known future projects are in planning. From Q2/2017, over 350 dwellings will be supplied increase.

 

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