Market shows slight improvement
Market shows slight improvement
The property market in Viet Nam showed some positive signs in the second quarter of this year, though difficulties remained, according to quarterly reports from real estate companies.
According to Savills Viet Nam, office space in the west of Ha Noi was renting reasonably despite significant supply. Cau Giay District remained the main supplier of office space, with 282,000sq m, accounting for 23 per cent of the market.
Total stock in the city was about 1.2 million square metres from 146 buildings, up 10 per cent over the first quarter and 22 per cent over last year.
Office renting greatly increased in the quarter to nearly 41,000sq.m, with the leased area of Grade A buildings in the west area continuing on a sharp upward take-up trend to reach 9,600sq m.
With regards to hotels, the average number of occupied rooms in the second quarter was 4,200, a year-on year increase of 9 per cent.
Seven projects supplying 1,300 hotel rooms were expected to enter the market this year and Tu Liem District would provide the largest supply, with 70 per cent of future projects set to be five-star hotels.
The serviced apartment sector rose again in the second quarter, meaning the total number of leased units has now increased for five consecutive quarters, reaching 2,600 and up 1.6 per cent year on year.
For apartment sales, the number of projects selling raw-construction units had increased because developers wanted to reduce the total price per unit to attract end users, according to Savills.
The soft liquidity of the villa market remained in the second quarter, with the average price of this market having dropped 2 per cent, the lowest decrease in approximately one year. However, significant challenges were facing villas in the coming months as there was still a lack of proper infrastructure development accompanying this kind of property.
A report from Cushman&Wakefied showed that rental prices for grade-A office space in Ha Noi remained stable for the second quarter, but grade-B offices saw a 2 per cent drop quarter-on-quarter.
Jonathan Tizzard, associate director of Cushman&Wakefield, said that high vacancy rates and a large increase in new stock in the short-term indicated that pressure on rental levels would increase.
The serviced apartment sector retained high occupancy rates and even witnessed an increase in rents during the second quarter. However, the oversupply of apartments in the city would influence the serviced-apartment market as more of this stock was converted. There are about 10,000 new apartment units in Ha Noi and low absorption rates continue.
HCM City's office market recorded a slight drop in rental rates in the second quarter. Grade A absorption was especially low this quarter, and with the prospect of new space coming on line in the short and medium term, it looked to remain a tenant's market.
The real estate market had been in decline in Viet Nam for some time now, the report said. Speculators had left the market for the most part, with end-users the targeted clients across sectors.
Retail space
According to a report by CB Richard Ellis Viet Nam (CBRE), the retail space drew attention of foreign investors.
Notably, Warburg Pincus, a global private equity firm, said at the end of May that it would buy around 20 per cent of the retail unit of Vingroup for US$200 million.
The Ministry of Industry and Trade's Circular 08/2013/TT-BTM about the Economic Needs Test would also create more confidence in foreign investors when entering the Viet Nam retail market.
Vingroup took the lead in Ha Noi retail market with two huge projects, the Vincom Mega Mall Royal City and Vincom Mega Mall Times City with total area of 437,000sq m. The former was planned to be opened this month, becoming the country's biggest trade centre, while the latter went up for rent in June.
However, 17 projects would enter the retail market by the year end with a total area of nearly 500,000sq m, creating huge pressure on the market while many existing trade centres were in difficulty and halting operations for restructuring or conversion to other uses, according to Savills.
The CBRE's report also revealed the continued trend of price declines in property market till the year end, saying that home-buyers remained cautious and still expected further price falls.
Regarding the Government's stimulus package, Do Thu Hang, head of Research and Consultancy at Savills Ha Noi, said only a very limited number of developers and buyers had been able to take advantage of the package of VND30 trillion ($1.43 billion) since the application process was extremely difficult.
Savills Viet Nam deputy managing director Troy Griffiths noted positively that Asia as a whole was showing potential economic growth of about 5 per cent this year, although he conceded that Viet Nam still had inferior business environment governance compared to its neighbours.
"If this governance is not improved, investments will go somewhere else like Indonesia or the Philippines," he warned.
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