Hanoi: oversupply may lead to real estate redundancies

Hanoi may witness a redundancy in high-end offices for rents in the coming months due to the oversupply coupled with low demand.

Too many available spaces

Real estate companies are racing to sell their products while many new projects are set to be put on the market soon.

Meanwhile, investors are also eyeing other markets such as Nha Trang and Da Lat for long-term business.

Numerous large projects, including Hanoi Garden City in Long Bien District and ParkCity in Ha Dong District, will open in the next few years.

Nguyen Do Viet, Deputy General Director of Song Da Thang Long Company, said up to 60-70% of luxury apartments in Hanoi have been built on speculation, and hundreds of projects are still underway.

Vu Xuan Thien, Deputy Director of Housing and Real Estate Management Department under the Ministry of Construction, said Hanoi’s high-end apartment sector will be saturated.

After the Tet Holiday, realty firms put a large number of luxury apartments on the market, but the sales and rentals remain low, especially apartments with the price of USD1,800 per square metres.

Despite the low demand, prices for luxury apartments in Hanoi remain high, Viet said, explaining that investors have to maintain the prices due high building costs.

He said this leaves them in a dilemma because if they do not reduce prices, they won’t be able to attract buyers.

This may leave them in the position of choosing between large losses and huge losses.

Matthew Powell, Director of Savills Hanoi, warned that small investors should carefully research the realty market before making decisions this year.

Ho Chi Minh City office rents have continued to fall this year, particularly Grade A offices.

By mid-March, office rents at some high-rise buildings in the city had dropped by 2-5%. Up to 40% of Grade A offices remain vacant. – Dtinews

Tags: Ha Noi property market, vietnam real estate market