Low-rise real estate prices in Hanoi spike

According to Savills' second quarter real estate market report, the landed house segment including villas, townhouses, and shophouses in Hanoi still maintains an impressive growth despite the COVID-19 pandemic.

The market performance of this segment reached 1,087 transactions, up 131 per cent year-on-year. In which, the absorption rate of shophouses and townhouses alone accounted for 83%, the highest level since the second quarter of 2019. The average primary price of shophouses was $8,135 per square meter, up 11% year-on-year. The secondary offering price has increased by about 7% per year over the past 5 years.

In the second quarter, the low-rise housing segment in Hanoi recorded 1,087 transactions, up 131 per cent year-on-year. (Source: Savills)

Nguyen Van Dinh, General Secretary of the Vietnam Real Estate Brokers Association, said that the money pouring into the real estate market is very big, but the scarcity of housing was the main reason for the price hike. The phenomenon of high demand and low supply and sharp price increases has made the dream of settling down for the majority of people much more difficult to achieve.

This shows that, compared to other channels such as stocks, gold, Bitcoin, just to name a few, real estate is a long-term, safe and effective investment channel.

The increased supply in the West has been driven by the increase in infrastructure projects, the good quality of commercial and residential developments and relatively reasonable prices compare to other areas of the market. As rural and decentralized property in the globe has seen strong demand, this is a direct response from the Covid surge to move from high density cities as well as take advantage of the flexibility of the work from home model.

Many real estate experts believe that investors are optimistic when the vaccination campaign is conducted on a large scale and they should focus on medium and long-term investments instead of risky ones.

Growth of low-rise developments

The low-rise real estate market has a high growth rate, but in fact, the growth rate of this segment tends to shift to urban areas. The West will continue to lead the villa and townhouse market in 2021 as it has improving infrastructure, several major projects and reputable developers

As a potential market to accelerate in the near future, real estate in the southwest of Hanoi still has an attraction to investors.

Another report on the property market in Hanoi in the first half of the year from Savills showed that the highest increase in estate prices was in the low-rise segment, followed by apartments. Specifically, the average price of villa and terrace houses increased in the second quarter of the year with 15 per cent and 32 per cent hikes respectively, in Hoang Mai district.

The wave of real estate investment away from the city center comes from two reasons. Due to the post-COVID mentality, homebuyers pay more attention to projects that are diverse in facilities, services, and green spaces.

With a plan to become an urban district by 2025, districts of Dong Anh, Hoai Duc, Gia Lam, and Thanh Tri will become notable investment destination. Many major traffic projects have been implemented and completed, such as: Nguyen Xien - Xa La street; Cat Linh - Ha Dong metro route; Cat Linh - Yen Nghia BRT; Ring Road 3.5.

The transport infrastructure in the Southwest of Hanoi is being developed such as Nguyen Xien - Xa La street, Linh Dam lake overpass and more.

The West of Hanoi is a promising investment area with the increasing number of good quality developments, Matthew Powell, Director of Savills Hanoi said. The West of Hanoi is expected to continue to lead the villa and townhouse market in 2021. Future developments will change the existing nature of office and apartment supply, with priorities given to this area, according to the latest Savills Market Report for the first half of this year.

Top player in the real estate brokerage market Cen Land assesses that the quality projects in the Southwest of Hanoi is increasing. The demand for real estate ownership in this area is increasing, investors and homebuyers tend to be interested in projects in prime locations and high-end living spaces.

Townships with unique planning and design draw the attention of many customers. Besides, urban areas with available amenities such as parks, schools, complexes are the priority of customers.