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Three forces have combined to crush Hanoi’s apartment market this year. Land fever, apartment over-pricing and a glut of supply have led to developers’ faces to darken.

Nguyen Dung Minh, Savills Vietnam’s head of sales, said: “Luxury and high-end apartment segments face the most difficulties, with very few successful transactions. Whilst mid-end segment is moderate and only some products targeting real end-users can attract customers’ attention.”

Some 40 per cent of 390 luxury condominium units belonging to Indochina Plaza Hanoi launched in April are still waiting for owners. Many apartments in several mid-end projects such as the Song Da To Ong building in Thanh Xuan district and Vietnamese European Village project apartments in the Mo Lao urban area, have no customers even though prices have decreased to $1,315 per square metre instead of $1,579 per square metre last year.

Meanwhile, some projects are enjoying good fortune with the CT5 apartment building at the Dang Xa new urban area prospering. Some 50 per cent of apartments at the 35-storey CT1 block belonging to The Price project in Ha Dong district were sold within two months since launching in April.

Minh said: “The projects which attracted customers’ attention were those with low prices suitable to the income of the majority of residents.” The Palm-tree apartment complex, part of the Ecopark township in Hung Yen province, has proven to be popular. It includes five buildings of 19-25 stories, comprising 1,500 units ranging from 71-92 square metres. Prices start at VND20 million per square metre.

Khuat Huu Vu Trung, a researcher from Collier International, said: “The dormant status of Hanoi’s secondary apartment market may last until August. The main reasons are the recent land fever, apartment prices exceeding buyers’ price ranges and a mass of new supply launched.”

Trung said land prices in some parts of Hanoi areas, especially Ba Vi and Dong Anh districts, had skyrocketed day-by-day diverting investors’ attention from apartments. Pham Thanh Hung, director of CenGroup - a real estate consultant company in Vietnam, said: “Before the Tet holiday, apartment prices were pushed up too high, which has turned off buyers.”

“With a person earning around $526 per month, even borrowing money from banks for 20 years, it is very difficult to purchase an apartment ranging from 72-130sqm in the mid to low-end apartment projects, that range from $900-$1,300 per square metre,” said Hung.

A glut of projects had also resulted in a buyers’ market. According to a Colliers Vietnam report, approximately 3,000 mid to high end apartments will enter the market this year, on top of the existing 12,000 apartments already developed.

Source: Ministry of Natural Resources and Environment

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