Ha Noi sees strong recovery in serviced apartment market in Q4/2022
Ha Noi sees strong recovery in serviced apartment market in Q4/2022
Ha Noi real estate market in the fourth quarter of 2022 saw a better performance in the serviced apartment segment than in apartments sales, according to the Savills’ report on the Ha Noi property market released on January 10.
On the serviced apartment market, occupancy of 81 per cent rose by four percentage points quarter on quarter and 12 percentage points year on year. That has nearly reached the pre-COVID (or the quarter of 2019) figure at 82 per cent.
Rent of VND575,000 per sq.m per month increased by 1 per cent quarter on quarter and 6 per cent year on year. Grade A charged the most at VND735,000 per sq.m per month.
According to the report, Ha Noi had no new supply of serviced apartments in the fourth quarter of 2022, while the stock of 5,935 units from 63 projects was stable quarter on quarter but increased by 4 per cent year on year.
In 2022, Ha Noi was sixth nationally in registered foreign direct investment (FDI), reaching US$1.7 billion, a year-on-year increase of 12 per cent. Newly registered FDI mostly came from Singapore, Japan, and South Korea.
The Ha Noi Department of Labour, War Invalids and Social Affairs granted over 10,000 new work permits to foreign workers and reissued 868.
China reopened its borders on 8 January 2023. This will likely correlate to manufacturing and industrial growth in Viet Nam, which will support FDI inflows and the serviced apartment sector. These properties largely cater to expats working in FDI projects and related enterprises, embassies, industrial parks, international banks, and other foreign businesses.
Meanwhile, Ha Noi also changed the infrastructure with the development of Samsung's R&D project in Starlake Tay Ho Tay, which is its largest R&D facility in Southeast Asia.
Ring Road 2 is expected to be completed at the beginning of 2023. Once completed, it will improve traffic in Ha Noi and between other provinces. These projects will drive demand for well-located serviced apartments.
“Samsung Viet Nam built its largest R&D centre in Southeast Asia. FDI will drive the serviced apartment sector. As large corporations enter, there will be a demand for high-quality products. As such, the market expects more high-end branded projects soon,” Matthew Powell, Director, Savills Ha Noi.
Nineteen future projects will provide 3,778 units from 2023 onwards. The secondary area will provide 3,097 units or 82 per cent. Branded operators will have 93 per cent or 3,596 units; brands include Ascott, Lotte, The Shilla, Pan Pacific, Wink, Hyatt and Hilton.
For the sector of apartments for sale, most developers are still pursuing new investment opportunities, which promise to bring development potential to the market.
Moreover, the Government's policies in promoting infrastructure development, providing support for the property market and amending laws are expected to bring positive changes to the recovery of the real estate market this year and beyond.
“Most developers are still pursuing new investment opportunities. Amended laws are expected to give the housing market room to grow,” said Do Thu Hang, Senior Director of Advisory Services at Savills Ha Noi.
In 2023, 19 new launches and the next phases of two projects will add 15,800 units to the Ha Noi apartment market. Grade B will have 79 per cent. Hoang Mai, Nam Tu Liem and Gia Lam will deliver 57 per cent.
Developers also want residential land in satellite provinces, which increasingly meet Ha Noi's housing demands. Hung Yen and Bac Ninh will provide approximately 103,900 units from 2023 to 2025 onward.
Improving infrastructure, more affordable products and diverse facilities are key success factors, according to Savills.
In the fourth quarter of 2022, Ha Noi's primary supply of 20,333 units dropped by 3 per cent quarter on quarter and 6 per cent year on year. There were no new projects, and all the new supplies came from the next phases of six existing projects.
In 2022, the new supply was the lowest for eight years at 12,637 units. Grade B had 83 per cent, followed by Grade A with 9 per cent.
There were 2,890 sales in the fourth quarter, decreasing by 20 per cent quarter on quarter and 30 per cent year on year. Grade B had 76 per cent of sales. The new supply was 28 per cent absorbed.
The average primary asking price of VND47 million per sq.m was stable quarter on quarter but improved by 15 per cent year on year.
Average primary prices were 42 per cent higher than secondary prices. The gap between primary and secondary prices was highest in Grade A projects (52 per cent), followed by Grade B (27 per cent) and Grade C (25 per cent).
Since launching in late 2018 and early 2019, Vinhomes Ocean Park and Vinhomes Smart City accounted for 45 per cent of new supply and 33 per cent of sales, reflecting continued demand for outlying areas.
