Click here
 

Cushman & Wakefield Research

When Published, Singapore
City and market analytical reports covering emerging markets in the Asia Pacific region by global real estate solution provider Cushman & Wakefield
 

MarketBeat Hanoi, Vietnam Serviced Apartment - Q4 2011

Apr 06, 2012
  • Print

MARKETBEAT
HANOI, VIETNAM

SERVICED APARTMENT
A Cushman & Wakefield Research Publication

Q4 2011

ECONOMIC OVERVIEW
According to the General Statistics Office (GSO), Vietnam's GDP growth is estimated to be around 5.8% this year, lower than the 8% to 9% in the years before the global economic crisis in 2008. Inflation in the fourth quarter has eased due to the tightened monetary policy, which rose to less than 1% each month, much lower than the rate a few months earlier. Inflation in Vietnam in 2011 is forecast to be 18.13%. FDI inflow to Vietnam in 2011was estimated to reach US$14.7 billion, down 26% from the previous year, but total disbursement hit US$11 billion, the same as in 2010. FDI in the real estate market this year is expected to be the lowest in five years, accounting for only 5.8% this year, ranking it fourth on the FDIattraction list. Among the investors, Singapore was the largest followed by The Republic of Korea and Japan.

Tay Ho District is always the priority location for expatriates staying in Hanoi. As a result, the occupancy rate of this district is higher than other locations. Besides serviced apartments supply, this district also provides tenants with a large supply of townhouses and villas which are more suitable for families.

OUTLOOK
The serviced apartment market performance in Hanoi is likely to be continuously gloomy in the coming term due to the global economic situation. Buy-to-let apartments continue to be strong competitors of serviced apartments due to the abundant supply and lower rent. With an additional supply of 378 Grade A units from Keangnam Hanoi Landmark Tower Project, which is due to be launched in the first quarter of 2012, occupancy and rental rates of Grade A are forecast to follow the continuous downward trend in the short-term. CAPITAL VALUES AS OF 4Q 2011
SUBMARKET AVERAGE RENT US$/SQM/MTH 3 MTH AGO % CHANGE 1 YR AGO SHORT TERM OUTLOOK

UNCHANGED SUPPLY IN Q4 2011
Hanoi's serviced apartment stock for Grade A and B in the fourth quarter of 2011 was unchanged compared to the previous quarter. By the end of 2011, there were 12 Grade A serviced apartment buildings, providing 1,372 units, an increase of 10% year-on-year. Meanwhile, Grade B stock remained unchanged in comparison with the previous year, which includes 16 buildings with 820 units. Tay Ho District which is the top location for Western expatriates had the highest market share of Grade A with 39% of total stock, followed by Ba Dinh and Hoan Kiem districts. However, Ba Dinh District occupies the biggest market share of Grade B with 38% and followed by Tay Ho District.

GRADE A CBD Non - CBD GRADE B CBD Non - CBD 19.5 20.6 0% -2% -8% -8% 33.6 33.5 0% -3% -2% -6%

GRADE A & B OVERALL RENTAL VS. OCCUPANCY RATE 4Q 2011

MARKET PERFORMANCE ş DOWNWARD TREND
The market performance in the fourth quarter of 2011 continued the downward trend for both Grade A and B serviced apartments. Occupancy rate of Grade A was at 79%, a decrease of 2% quarteron-quarter and 3% year-on-year. Almost all the Grade A buildings have vacant units. Meanwhile, the occupancy rate of Grade B buildings fell slightly by 1% quarter-on-quarter and 1% year-onyear, where it stood at 89%. Parallel to the low occupancy rates, quoting rents also kept decreasing in the fourth quarter of 2011. Grade A rent was at US$33.5 per sq m per month (/sq.m.mo) (Service charge included, VAT excluded), a drop of 3% quarter-on-quarter and 4% year-onyear. The rent for Grade B buildings reached US$20.5/sq.m. /mo, a decrease of 2% quarter-on-quarter and 8% year-on-year.

HANOI MARKET STATISTICS
CURRENT SUPPLY BY GRADE IN 4Q 2011 GRADE A B C NO. OF BUILDINGS 12 16 15 NO. OF UNITS 1,372 820 207

SIGNIFICANT PROJECTS UNDER CONSTRUCTION BUILDING LOCATION Keangnam Hanoi Landmark Tower Lotte Center Hanoi Elegant Tay Ho Le Roi du Soleil Vietinbank Tower HD Westlake Tu Liem District Ba Dinh District Tay Ho District Tay Ho District Tu Liem District Tay Ho District

DEVELOPER Keangnam Co. Lotte Duy Hoang Minh Tan Hoang Minh Corp. Vietinbank HD Group

EST. NUMBER OF UNITS 378 254 80 N/A N/A N/A

EXPECTED COMPLETION 1Q2012 2013 2012 2014 2014 Onward

Unit 602, Asia Tower 6 Nha Tho Str., Hoan Kiem Dist Hanoi Tel: +(84-4) 3938 1786 www.cushmanwakefield.com

This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. ę2012 Cushman & Wakefield, Inc. All rights reserved.