Real estate firm Savills Vietnam has this week announced its Property Price Index (SPPI) for Ho Chi Minh City and Hanoi, and mixed results for both cities and both the residential and office markets.
HO CHI MINH CITY – Residential Index
In Q2 2016 the Residential Index increased 1 point quarter-on-quarter (QoQ) and 3 points year-on-year (YoY) to 92.7. The Apartment Price Index has increased steadily since Q3/2015, the firm noted.
There were approximately 6,900 sales, up 10 percent QoQ and 34 percent YoY. The overall absorption rate was stable QoQ at 17 percent but decreasing 2ppts YoY.
Although Grade ‘A’ sales increased 74 percent, absorption was down 5ppts due to abundant new supply. Grade ‘B’ was the market driver with 49 percent of total sales, followed by Grade ‘C’ with 47 percent.
Better construction progress and flexible and prolonged payment schemes from developers continued to be the major contributors to the price improvement and good sales in Q2 2016. The QoQ index is expected to follow an upward trend next quarter, Savills reported.
Office Index
The office index was 85.3, up 2 points QoQ and 7 points YoY. The improvements were a result of increased occupancy by 1ppt QoQ and 4ppts YoY, and rents by 1 percent QoQ and 5 percent YoY. The average occupancy peaked again at 97 percent.
Grade ‘A’ and ‘B’ projects in the CBD continued to perform well this quarter, leading to a yearly increase in both occupancies by 3ppts and rent by 4 percent. As a result, the CBD index raised 1 point QoQ and 6 points YoY. Meanwhile, the non-CBD continued the upward trend in occupancy by 1ppt QoQ and 5ppts YoY, resulting in the index rising 2 points QoQ and 9 points YoY.
In Q2 2016, total office take-up was approximately 14,200 swm, decreasing 46 percent QoQ and down 44 percent YoY. This is the result of most projects reaching full occupancy.
With growing demand, Grade ‘A’ and ‘B’ office rentals are expected to increase in coming years. Savills forecasted an approximate rise of 4 percent per annum over the next three years.
HANOI -Residential Index
During Q2 2016, the residential index was 104.7 points, decreasing 3ppts QoQ and 3.5ppts YoY with an average selling price of VND 26.3 million per sqm.
The overall primary absorption rate was approximately 35 percent, up 1ppt both QoQ and YoY, similar to the previous quarter with 6,000 sales, up 7 percent QoQ and 30 percent YoY.
Grade ‘B’ remained the market driver with 73 percent share of sales and increased absorption by 3ppts QoQ up to 40 percent due to good performance in large-scale projects.
Following was Grade ‘C’ at 25 percent absorption and then Grade ‘A’ with a significant increase of 11ppts QoQ to 28 percent.
Circular No.06/2016/TT-NHNN has yet to make an impact on the real estate market, Savills said, but by the end of the year its effects may become clearer. Tu Liem Ha Dong and Hoang Mai continue to attract many affordable housing projects due to connectivity, infrastructure development and land bank.
Office Index
During Q2 2016, the Office Index was 59.4 points, increasing 1.6 points QoQ and 3.1 points YoY due to increased rent across all grades. The CBD had a slight improvement of 1 point QoQ and 4.9 points YoY due to stable occupancy and a rent increase of 1 percent QoQ. Non-CBD index was up 2.1 points QoQ and 5.1 points YoY with occupancy increasing 1.7ppts QoQ and rent increasing 1.2 percent QoQ.
In 2H 2016 Savills said the CBD will continue to perform well, with total office supply unchanged, while the non-CBD is expected to experience supply pressure from new projects and those from previous quarters with large vacancy.
