The ‘virtual fever’ of the Hanoi real estate market has ended, and the hibernation period of the market has begun. There are very few transactions with the prices down by 20-30%.
Director of Century, a real estate firm, Nguyen Trung Vu, said that Hanoi has followed HCM City into a quiet period, when both buyers and sellers are careful about their deals. However, Trung said that non-speculation deals are still occurring as usual, where houses or apartments worth less than VND2bil are being sold, and the buyers are not speculators, but have real demand for accommodations.
Vu said that the land areas for construction projects have seen prices decrease by 20-30% over the beginning of the year. The prices once hit VND30-32mil/sq m, but now are selling at VND20mil/sq m.
Contrary to all predictions, the information about the integration of Ha Tay province into Hanoi has not helped heat up land prices in the province. Nguyen Van Minh, Director of the Hanoi Real Estate Trading Centre (HRETC), said that land plots in Ha Tay province are only attracting professional investors, who can spend money on big construction projects, while they are not fit for accommodations because the areas are too far from the city centre, thus not favourable for commuting. That explains why the prices of land continue sliding there.
The same situation also can be seen in the apartment market with prices down by 20%. The apartments in Trung Hoa-Nhan Chinh urban area are now being offered at VND23-25mil/sq m, down by VND2-5mil/sq m over the beginning of the year, while apartments in My Dinh and Me Tri urban areas are selling at VND22-23mil/sq m. The apartments at No 10 Lang Ha street are selling at VND25.5mil/sq m, a decrease of VND1.5mil/sq m over the end of 2007.
However, prices of apartments in luxury residential areas, including The Manor and Ciputra, are staying firm at VND10bil/ apartment.
According to Vu from Century, a paradox exists in Hanoi: while mid-range apartments are selling slowly, luxury apartments are still selling well. For example, apartments at Pacific Palace are still selling at the high price of $4,500/sq m.
Office and apartment leasing fees in some low-range buildings have decreased compared to the end of 2007. In January 2008, for example, the leasing fee of My Dinh apartments was $700/month, but the cost had decreased to $550-700/month. Meanwhile, Vimeco’s apartments are now going for $450-700/month, down by 10% over the end of December 2007.
According to the Phu Thanh Real Estate Centre on Nguyen Trai street, though prices have been going down, they remain firmly high. Clients who have less than VND1bil will only be able to buy apartments far from the centre of Hanoi like in Van Quan, Phap Van and Ha Dong areas.
Real estate trading centres complain that there are few clients these days with more visitors than buyers. ACBR on Nguyen Truong To street said that the demand for high-grade offices has also been decreasing. Companies, trying to tighten their belts, are not leasing expensive buildings.
Experts say that real estate price decreases were anticipated as prices stayed overly high for a long period.