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Jul 19, 2023 / 15:45

Hanoi's property market booms with rising condo prices

The real estate market in Hanoi has been experiencing a persistent shortage of housing supply in the first half of 2023.

The selling price of condominium apartments in Hanoi is expected to continue to rise based on the current market situation, according to local insiders.

 New supplies drop over 53% year-on-year due to existing macro challenges. Photo: Masteri West Height

Nguyen Van Dinh, chairman of the Vietnam Association of Realtors (VARS), said the lack of new housing supply in the Hanoi condominium market leads to a price surge. "The mid-end and affordable segments, as well as commercial properties with good profitability, are still seeing transactions, and their prices are unlikely to fall, especially in the current context of limited supply," he added.

A report on the real estate market by CBRE Vietnam showed that new residential supply in Hanoi remained low in the second quarter of 2023, with 1,820 apartments from nine projects listed for sale.

Nguyen Hoai An, senior director of CBRE Vietnam's Hanoi office, said the total new supply in the first half of 2023 reached 3,926 apartments, down more than 53% year-on-year due to existing macro challenges.

"This is also the lowest number of new launches in a six-month period in the past five years. The high-end segments accounted for a larger share of all newly listed units at 51%," she said.

In the second quarter of 2023, the average primary price in Hanoi's condominium market increased by 1.6% from the previous quarter and 9.5% from the same period in 2022, reaching VND47.5 million ($2,008) per sqm (excluding VAT and maintenance fees).

The average selling price of mid-end apartments was around VND31 million ($1,310) per sqm, almost unchanged from the previous quarter but up 3.2% year-on-year. In terms of location, most areas saw price increases compared to the same period last year, with Dong Da, Cau Giay, Ha Dong and Bac Tu Liem showing the highest increases of 5-6% year-on-year.

Nguyen Manh Ha, Vice Chairman of the Vietnam Real Estate Association, said: "It is difficult for primary condominiums to lower the selling price if there is still a shortage of new property supply and the flow of credit remains restricted."

He pointed out that the time required for legal review, completion of project approval applications, and increased costs have led to higher prices for certain projects within the same segment. 

According to Tran Quang Trung, Business Development Director of Vietnam's Protech OneHousing, many buyers expecting a drop in housing prices will be disappointed due to the continued increase in primary prices, limited supply, and rising input costs.

Upward price trend

 The Hanoi property market will see a 4-7% price hike in the last months of this year. Photo: Pham Hung/ The Hanoi Times

CBRE's An predicted that the city's housing supply will improve in the final months of 2023, with more than 6,300 new units expected to be listed, bringing the total new supply this year to 10,500 units.

"The majority of these new launches will come from high-end projects in the west of the city, which will keep the average price at around VND47-49 million ($1,986-$2,071) sqm at the end of 2023," she said.

Meanwhile, Colliers Vietnam also predicted that the residential market in Hanoi will see a 4-7% price increase in the last months of 2023 compared to 2022, thanks to the improved positioning of projects and prime locations.

The affordable housing segment is also attracting the attention of buyers and developers, with 40 projects currently underway, including 18 projects expected to be completed between 2021 and 2025, providing around 12,137 units or 869,000 sqm of floor area.

The high-end segment remains a promising investment opportunity, such as the recently launched Capital Elite project, which is considered to be the new focal point of real estate in West Hanoi.

In addition, the Masteri West Height project located in Vinhomes Smart City urban area has released Tower B for sale at a primary price range of $2,850-$3,680 per sqm, an average increase of 10-15% compared to previously launched towers.

However, as land supply in central areas becomes increasingly scarce, developers are shifting their focus to suburban districts such as Hoai Duc and Gia Lam, according to Colliers.

Dinh, the chairman of VARS, predicted that land in downtown Hanoi will become increasingly scarce, resulting in only a few high-end real estate projects being developed.

He added that the demand for condominiums from residents remains high, making it challenging to reduce prices, particularly in the context of limited supply. Additionally, the prices of condominiums in suburban areas are anticipated to increase at a faster pace compared to downtown areas due to the escalating cost of land in the suburbs.

The supply-demand mismatch is expected to continue this year, with Savills Vietnam estimating that the supply of apartments will continue to decline. Approximately 5,000 units will be delayed in completion, and future supply will reach only 8,000 units in 2023, a 60% decrease compared to 2022.

In the 2022-2025 period, Hanoi is expected to have nearly 79,000 apartments for sale, meeting nearly half of the demand.