Q3 was flat, with offices closed, retail shuttered and residential launches delayed, the pandemic impacted all aspects of society. There was little capacity for movement of any kind. This is reflected in our data and the abbreviated reporting style. Simply put - nothing was open, and nothing much happened.
Our Market Briefs focus on Ha Noi and Ho Chi Minh City across three key asset classes: Apartment, Office, and Villa & Townhouse.
Sales and absorption were the lowest for the last five years. Sales were over 400 units, decreasing -70% QoQ and -94% YoY, absorption was 14% down -23ppts QoQ and -58ppts YoY. Grade C was the best performer, at 81% sales share and 21% absorption.
Primary supply remains suppressed. Developer confidence is low, such that new projects are being deferred. Where next phases are being launched then there has been decent growth. All eyes are now on Q4 launches without pandemic restriction.
Vincent Nguyen, Director of Residential Sales
Occupancy was stable QoQ at 90% but decreased -4% YoY. Rent decreased -1% QoQ to US$31/m2/mth gross. Landlords eased rents slightly, and were more open to negotiations.
The tension around the paradigm shift to working from home and return to office, continues. New lease fitouts and refurbishment of existing space is ensuring flexible solutions. Decentralization is providing more modest alternatives to the tightly held CBD.
Tu Thi Hong An, Director, Commercial Leasing, Savills HCMC
Future supply to 2024 is expected to reach nearly 9,600 dwellings/plots. Thu Duc City has the greatest share at 33%, followed by Binh Chanh with 24% and Binh tan with 11%. With an available land bank, good urban planning, and infrastructure appeal, Thu Duc City continues to attract residential development.
HCMC landed property has easily retained interest. The absurdly low supply volume guarantees purchaser favour, but also pushes demand into alternative locations such as Dong Nai, Binh Duong & Long An.
Vo Thi Khanh Trang, Associate Director of Research, Savills HCM
Quarterly sales decreased -50% QoQ due to the city-wide two-month lockdown. Primary stock decreased -8% QoQ and -27% YoY. Limited supply and expensive inventory have pushed the popularity of developments into surrounding provinces. With infrastructure improvements, the growth of secondary hubs will continue.
The apartment sector is not immune to Covid’s negative impacts, however, it is well-positioned for post-pandemic recovery thanks to strong demand drivers. Future supply in the secondary hubs offers an array of locations and more affordable choices. This is ideal as buyers are increasingly price conscious.
Do Thu Hang, Senior Director, Advisory Services, Savills Ha Noi
Some landlords offered discounts to support occupiers during the pandemic. This resulted in the average asking rent decreasing by -2% QoQ and -2% YoY. The lockdown slowed leasing activity, as tenants could not relocate or expand. New supply and improving infrastructure will benefit the West, which will provide the greatest future supply.
The lockdown has affected everyone, which will mean slow leasing activity for the remainder of 2021. However, several larger occupiers are using the limbo state to refurbish their offices and negotiate better terms.
Hoang Nguyet Minh, Director, Commercial Leasing, Savills Ha Noi
Social distancing restrictions impacted supply in the third quarter, which decreased -75% QoQ and -47% YoY. Sales dropped due to buyer caution, limited new supply, and expensive remaining stock. However, with abundant future supply and the strong demand demonstrated in the first half of 2021, the market outlook is promising and should quickly return to pre-pandemic transaction levels.
Globally, liquidity has increased alongside diversity in products as the Covid rest has pushed alternative residential and lifestyle choices. Following a quarter break of social distancing, Ha Noi’s landed residential market is expected to bounce back quickly with strong demand and good future supply.
Matthew Powell, Director, Savills Ha Noi
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