Mr. Matthew Powell, Director of Savills Hanoi, with Ms. Do Thi Thu Hang, Savills Director of Research & Advisory, review the Real Estate business environment over 2020, performance in the affordable apartment market and provide some thoughts on what to look out for in 2021.
Ms. Do Thu Hang, said: “In addition to Covid-19 effects, a lot of Real Estate businesses have been affected by slower project licensing and approval processes. There has also been increased competition from large supply and project implementation. Also, buyers are becoming more demanding in design, handover condition and extent of project utilities.”
According to Ms. Hang, the pandemic will carry on affecting both Real Estate performance and associated businesses in the first half of 2021.
“Investing in Real Estate is always something that businesses can do in more quiet times to set up for the future. In the mid-term, they can maintain land fund development, project funding, project implementation and sales with the anticipation of improved growth over the long term. In addition, further definition of potential customer groups to establish better segment targeting from which they can then develop further value. As an example: investing in urban housing Real Estate in Provinces with good legal frameworks to deliver product lines oriented to local customers.”
Mr. Matthew Powell Director of Savills Hanoi said, as overall market prices continue to increase, affordable apartments represent a development opportunity.
“Despite increasing prices, new investment areas are becoming made newly available by new infrastructure factors, and in large-scale development areas such as Long Bien and Gia Lam Districts. Location predominantly determines land and dwelling prices. Government policies can play a more active role by making adjustments to allow the affordable housing market to operate more smoothly.” said Mr. Powell.
“Despite increasing prices, new investment areas are becoming made newly available by new infrastructure factors, and in large-scale development areas such as Long Bien and Gia Lam Districts. Location predominantly determines land and dwelling prices. Government policies can play a more active role by making adjustments to allow the affordable housing market to operate more smoothly.” said Mr. Powell.
According to Savills Hanoi Research, 2-bedroom apartments priced between VND 1.4 billion and VND 1.6 billion are still available in the city. In Q3/2020, primary supply of 3200 apartments priced below 23 million/m2 represented a 12% market share. Limited primary stock from developers is a barrier to purchase, but there is still potential in the secondary market.
Mr. Powell also provided insights on growth opportunities in the affordable housing market.
“Firstly, major developers are bringing more focus to affordable housing, providing good quality at good prices in the right locations. Secondly, confidence remains for recovery in 2021. All Real Estate segment recovery is driven by macroeconomics and demographic demand. Supply levels are expected to improve in March or April 2021 with higher quality property development becoming more active in Ha Noi and Ho Chi Minh City. Thirdly, growth opportunities in the affordable housing segment are closely correlated with commercial activities and transport infrastructure, especially with Ha Noi and Ho Chi Minh City facing increasing traffic problems and the emergence of new metro lines.”