Apartments in suburban area residential projects are currently priced at around 50-60 million VND/m2 and shophouse prices are between 200-300 million VND/m2. With a price sensitive market and lack of Grade A supply, absorption rates and the success in these areas continue to perplex buyers and investors.
The latest Savills Home-Buyer survey confirmed ‘price’ and ‘location’ remain key to decision making. Inner city and suburban area price gaps are narrowing as more facilities are being added to compensate for distance. New infrastructure also drives development farther out. From 2016, primary prices have increased by an average 5% each year.
Ms. Do Thi Thu Hang, Savills Hanoi Director of Research observed if pricing levels in suburban areas remain, this would be the first time they exceeded those in more central projects. Ms Hang went onto say: "Suburban area projects will also be facing stiff competition, especially from projects within Belts 2 and 3. Pricing alone suggests absorption may be slow”.
However, suburban projects have some unique appeals:
Firstly, they tend to be part of large-scale projects extensively invested with utilities, services, and landscapes; all of which continually enhance resident quality of life. However, the major difference is actually in higher quality handover condition over the usual basic level of finish. Outer area prices are also being accelerated by infrastructure with routes to suburban areas either under upgrade or completely new roads being developed. A swift commute to the city also adds to the appeal of living farther out. Developers will need to see how the market responds and whether to adjust or keep prices unchanged.
The 2019 Global Competitiveness Report found Viet Nam ranked 66 out of 144 countries for transportation infrastructure, and in ASEAN has the second highest level of infrastructure investment after Indonesia.
Mr. Nguyen Duc Them- Savills International Residential Sales manager confirmed house prices in Ha Noi are relatively reasonable. “Primary house prices have been increasing steadily each year and will not drop in 2020, despite the effects of Covid-19. Prices tend to ease first in the secondary market or in primary projects that have been on the market for a year or two. More flexible sales policies with extra attractive incentives will be needed to liquidate them. It is difficult for new projects to launch with a low selling price”, Mr. Them affirmed.
Per sqm prices between US$7000 – US$10,000 as HCMC has now are yet to be seen in Ha Noi. When the Covid-19 pandemic is under wider control with recovery underway, buyers will have an array of new products with appealing sales incentives to choose from. Large-scale project developers will have to carefully consider sales strategies for the first 6 months, 1 to 2 years or even longer.
With developers looking to launch projects, or next phases that have been held back, the apartment sector is expected to be far more active to year-end. Around 10,000 units from one existing project and 11 up-coming projects are expected. Gia Lam District will have a 38% market share, followed by Tu Liem with 37 percent. Grade B will continue to lead supply with a wide variety of options under 20 million VND/m2.