Ha Noi property market has lower transactions in Q3 due to COVID-19

Saturday, Oct 09, 2021 09:03

A view of Ha Noi City. — Photo kinhtedothi.vn

The Ha Noi apartment market saw a decrease in the number of transactions in the third quarter of this year due to a citywide two-month lockdown during the fourth outbreak of COVID-19.

Amid disruptions in sales activities due to a new wave of COVID-19 from late July to late September, sold units recorded in the third quarter reached 3,000, down 33 per cent year on year, according to the CBRE Viet Nam’s report on Ha Noi property market in the third quarter of this year. There were a total of around 11,000 units sold in the first nine months of this year, slightly down by 1 per cent year on year.

However, the market witnessed a positive signal on the sold rate of newly launched projects. In the third quarter, newly launched projects reached a 52 per cent average sold rate during their first launched quarter, which is higher than the rates recorded in 2019-2020 (41 per cent - 42 per cent).

In the first nine months, the total new launch of apartments in Ha Noi slightly increased compared to that of the same period last year, though significantly lower than the pre-COVID level.

Especially, the total new launch during the first three quarters of the year was 11,430 units, up 7 per cent year on year, of which the third quarter recorded 3,483 units launched, up 1 per cent year on year. Ninety-three per cent of the total new launch is from township developments in the East and West of Ha Noi.

Launching activities were mostly in July before the two-month lockdown period, and resumed in late September as restrictions eased. In terms of segment, there were only high-end and mid-end products launched in the third quarter with the high-end segment covering 65 per cent of the total new launch during the quarter.

As residential projects and amenities within major township developments are being completed and handed over to the residents, decentralised townships were able to gradually upgrade their positioning and introduce new products at high-end prices in recent quarters, CBRE Viet Nam reported.

In the third quarter, primary prices of apartments for sale in Ha Noi averaged US$1,542 per sq.m (net of VAT and maintenance fee), up by 16 per cent year on year due to the higher proportion of high-end projects in the total new launch in this quarter compared to the same period last year.

The secondary market experienced a relatively quiet quarter due to restrictions in travel. Secondary prices averaged at $1,156 per sq.m as of the third quarter, down 1 per cent quarter on quarter and up 2 per cent year on year.

There are many factors leading to price increases, including low supply, higher product quality, upgraded infrastructure and a recent steel price hike, according to Do Thu Hang, Senior Director, Advisory Services, Savills Hanoi.

“The apartment sector is not immune to COVID-19’s negative impacts, however, it is well positioned for post-pandemic recovery thanks to strong demand drivers. Future supply in the secondary hubs offers an array of locations and more affordable choices.”

“The primary prices have increased by 10 per cent each year in Tu Liem District and 17 per cent each year in Cau Giay District since 2017. The reason for the price growth has been due to lower new supply, especially the number of projects with good legal status has been decreasing.”

At the same time, newly launched projects are projects that are legally guaranteed with a favourable location, good quality and more utilities. This has pushed the prices of these projects higher than the market’s average price, thereby causing the average primary price of the whole market to continuously increase in recent years, Hang said.

Regarding the market outlook in the fourth quarter, Hang said: “Ha Noi is controlling COVID quite well. Meanwhile, interest rates are low, deposit mobilisation is at a record low, and other investment channels are not attractive. Therefore, good projects with favourable locations will still attract investors as well as end-users.”

“The apartment market's movements in the last three months of the year will likely be more positive than in the previous quarters, with supply growth and absorption recovery. The primary selling prices will remain stable. Those are expected to push the transaction volume up in the fourth quarter.”

Investors need to have a sales strategy with a reasonable offering price. Besides that, they should also offer attractive sales policies as well as flexible payment schedules to reduce financial pressure as well as attract more customers, Hang said.

“Products with new and differentiating features continued to be introduced to the market, as a result of increasingly innovative R&D capabilities, as well as the partnership between local and foreign developers; local developers and international project management companies/operators. This trend is expected to continue showing product diversification and stronger competition in the market,” said Nguyen Hoai An, director of Hanoi Branch, CBRE Vietnam.

Primary prices are forecast to increase at 5-7 per cent per annum over the next three years driven by upgraded positioning in township developments and expected launches of high-end and luxury projects in prime locations, according to CBRE Viet Nam.

In the fourth quarter, 11 new launches and the next phases of two projects will add 7,900 units. Eighty-seven per cent will be Grade B, and Tu Liem, Gia Lam, and Hoang Mai districts will have a total share of 81 per cent, Savills Viet Nam reported.

The growth of secondary hubs will continue. While the post-pandemic work-from-home trend may be a contributing factor, the reality is buyers are increasingly price conscious. — VNS

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