In the third quarter, total supply of apartments for sales in the primary market from projects were over 1,000, which mostly came from Tu Liem, Dong Da, Hai Ba Trung districts. Nevertheless, the number of successful transactions across the primary market in the third quarter was lower than the second quarter. It was estimated that only more than 400 apartments were sold, accounting for nearly 38 percent of total supply of primary supply compared with 610 apartments sold in the second quarter.

The primary offer price in the third quarter averaged about $1,830 a square metre, rising by 5.5 percent against the second quarter. The average secondary offer price also increased in all 12 researched districts, some 16 percent, against the second quarter. In the secondary market, the offer price fluctuated around $660 – 4,200 a square metre.

From the fourth quarter to 2012, it is estimated that at least over 10,000 apartments will be launched in the market. Of the total, around 34 percent comes from Tu Liem district, some 30 percent from Cau Giay district. The primary market in the fourth quarter is expected to receive an additional supply of approximately 2,000 apartments.

However, according to Savills, this quarter sees no significant change regarding the primary offer prices for all items compared with the third quarter. Prices and activities of the secondary market may be impacted, partly because of application of personal income tax for real estate transfer since the end of September.

Unlike the market segment of apartments for sales, from the fourth quarter, the average rental price in the service apartment segment has continuously decreased. In the third quarter, the rental price of service apartments dropped by 4.8 percent, or $1.2 a square metre compared with the second quarter. The occupancy rate in the service apartment market was reduced by 3 percent to 88 percent.

The main reason for such reduced occupancy seems to be the supply growth from 100 new apartments or some 4 percent of total supply of the service apartment market segment in the second quarter. Total supply in the service apartment market in the third quarter rose by over 219,000 square metre because additional 100 new apartments from Hanoi Fraser Suites project in Xuan Dieu Street, Tay Ho district were introduced to the market.

There are now 41 buildings in seven districts of Hanoi supplying to the market nearly 2,200 apartments. The areas of different kinds of apartments range from over 40 square meters to 560 square meters. Demand for service apartments mainly comes from foreign experts working in embassies, international non-government organisations and foreign companies.

In the fourth quarter, Hanoi has some 10 remaining service apartments of Hanoi Fraser Suites project in Tay Ho district to be launched in the market. By 2012, it is expected that additional seven service apartment projects will launch 1,200 apartments to the market. Although the economic recovery signs have been seen in many countries in the world, in the upcoming time, demand for service apartments will continue falling slightly because foreign companies still meet difficulties due to aftermaths of the economic crisis.

Although the economy is facing various difficulties, total retail sales of services and goods in Vietnam still posts a year-on-year growth of 20 percent. Savills said that demand for retail sales sites (shopping centres, supermarkets, wholesale centres) tends to slightly increase when the economy has good recovery signs.

Total retail sale area in the market is now some 360,000 square meters, supplied by 10 shopping centres, 78 supermarkets, two wholesale centres and 12 retail sale blocks. The central area of the city still runs efficiently with stable rental prices and the occupancy rate is always high while the illogical market position has made projects in urban and rural areas of Hanoi run inefficiently.

The central area of the city still has the most expensive rental price, some $40 to $150 a square metre with the occupancy rate of over 90 percent. Right after the central area of the city, urban areas have an average retail price of some $20 to $120 a square metre a month. The rental price in rural areas stays at $7 to $50 a square metre.

Hanoi expects to have additional 11,200 square meters of retail sales in the fourth quarter. As scheduled, by the end of 2010 and 2011, there will be some 82,000 and 425,000 square meters of retail sales in the market. Most of supply in the future of 2011 will mostly concentrate in urban areas.

In the third quarter, four-star Mercure Hanoi La Gare Hotel with 102 rooms came into operation, bringing total three-to-five star hotels of the city from 5,576 to 5,678 rooms. Business results of hotels continued dropping because of adverse impacts from the global economic recession and H1N1.

The revenue per room of five-star hotels fell by 10 percent against the second quarter. However, the rental revenue per room of four-star hotels slightly reduced, or nearly did not change. The average rental price of four-star hotels decreased by 5 percent against a quarter earlier.

However, the occupancy rate slightly increased by 2 percent against the second quarter, reaching 54 percent. The average rental price of five-star hotels dropped by 10 percent against the second quarter. The occupancy rate of five-star hotels was 51 percent in the third quarter, a four-year low. Demand for the hospitality market slightly reduced because of decrease in international visitors to Hanoi.

Savills estimated that some 1,180 rooms of three to five star hotels will be introduced to the market in 2010. Of the figure, some nearly 1,000 rooms are located in Cau Giay district and Tu Liem district. Supply increase and demand decrease will make many hotels meet various difficulties in the upcoming time.

Thoi Bao Kinh Te Vietnam - November 10, 2009