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VNRE - Unlike the southern property market where developers are grappling with a host of difficulties owing to oversupply and cautious customers, the northern market, especially the capital city of Hanoi, is enjoying robust trade with prices still on the increase. It is all the more so for apartments.

Latest reports of market research and consultancy firms including CB Richard Ellis Vietnam (CBRE) and Savills Vietnam show that the supply in the residential market in Hanoi will increase significantly in the coming time.

According to CBRE, the apartment market in the capital city recorded an abundant new supply with some 8,200 units in the first quarter of this year, equivalent to half of the total supply of the whole last year. Of which, two major projects including Royal City and Times City developed by the local property developer Vincom Joint Stock Company accounted for over 50% of total new supply in this quarter, most of them being middle-end apartments.

Statistics from a new report of Savills Vietnam showed that the existing 20 projects are providing the primary market in Hanoi with the same amount, accounting for 70% of total primary supply. In addition, about 21,000 apartments in 35 property projects will join the primary market in the rest of this year.

Despite of a significant supply, the northern residential market recorded a positive improvement in sales during the first quarter as compared with the last quarter of last year. Meanwhile Grade A projects, though witnessing better performance than in the previous quarter, recorded the number of sold apartments slower than other grades in the market.

Prices slightly increase

According to Savills, asking prices in the secondary residential market averagely increased 3% as compared with the last quarter of 2010; in which projects in Long Bien District saw the strongest increase with 8.5%, followed by those in Gia Lam District with a 6% increase. Notably, Tay Ho District is offering the highest average asking price in Hanoi residential market with an average price of nearly VND50 million per square meter.

With the same view, CBRE reported that the apartment price on the secondary market was generally stable, except for the mid-end segment that saw price increase by about 8.5% over the previous quarter. According to CBRE, the stable price trend is expected to continue during this year’s second quarter due to new supply expected to remain high with some 4,000 units. Some mid-end apartment projects were launched in the first quarter, such as AZ Thang Long, Vinh Hung Dominium, Bemes Cau Buou, Golden Palace - Ha Dong, Rung Co Ecopark and Tan Tay Do apartment projects.

Some property experts projected that although the current abundant supply posing more pressure on investors, project developers whose condo projects have good locations, keep on their construction schedules and have good quality would find it not so difficult to sell their apartments.

Safety channel for investment

The government policies have shifted from focusing on economic growth to controlling inflation in the first quarter of this year, while the credit tightening policy has prompted commercial banks to limit their loans. All these factors have negatively impacted on the property market.

However, CBRE said that as investments into the gold market and the stock market have become less appealing, real estate has emerged as a safe channel of choices for many people to put their investments.

Do Thi Thu Hang, head of research and consultant department for Savills Vietnam, seconded the above ideas, saying that the demand for real estate was very huge, as some 53% of Vietnam’s population are aged under 30 and have a monthly income below VND15 million. The growing group is believed to increase the huge demand for apartments in the years to come.

Reported by Thoa Nguyen | Saigon Times Daily

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