Savills Vietnam reports on Savills Property Price Index in Hanoi & HCMC
17 February 2017
SAVILLS PROPERTY PRICE INDEX (SPPI)
Savills Vietnam would like to announce Savills Property Price Index (SPPI) in February 2017 for Ho Chi Minh City and Hanoi with highlighted information as below:
In Q4/2016, the Residential Index was 93, increasing 1 point quarter-on-quarter (QoQ) and 3 points year-on-year (YoY) due to price escalations in newly launched projects. From 2013-2015, the residential index remained flat.
The absorption rate was 23%, increasing 4 percentage points (ppts) QoQ and 1 ppt YoY. In Q4/2016, there were approximately 10,200 sales, up 36% QoQ and 32% YoY, the highest volume since 2010. While Grade C continued to perform well, accounting for 49% of total sales, Grade B had over 4,700 sales, a significant increase of 60% QoQ and 6% YoY.
The apartment market will receive a large future supply in the next two years, especially from the mid to high-end segment. Consequently, the residential index is expected to show increases over the next few quarters.
In Q4/2016, the Office Index was 86, stable QoQ but up 6 points YoY. Annual improvements resulted from occupancy increases of 3 ppts YoY and rent increases 2% YoY. The average annual occupancy reached a new high of 97 percent.
The CBD index was up 4 points YoY due to average occupancy increases of 2 ppts YoY and rent increases of 3% YoY.
Meanwhile, the non-CBD index benefited from limited CBD vacancy, up 5 points YoY from average occupancy increases of 5 ppts YoY.
In Q4/2016, the total office take-up was approximately 12,580 m2, decreasing -78% YoY due to limited vacancy. Grade A rents are expected to increase in coming years due to sustained demand exceeding new supply. Savills forecast approximate Grade A rent increases of 3% pa for the next three years.
In Q4/2016, the Residential Index was 104.3, decreasing -1.5 points (pts) quarter-on-quarter (QoQ) and -3.9 pts year-on-year (YoY), due to secondary price decreases in the wake of new supply. Since mid-2014, the Residential Index has remained relatively stable.
The primary absorption rate was approximately 31%, down -2 percentage points (ppts) QoQ and -9 ppts YoY. There were approximately 6,730 primary sales this quarter, increasing 19% QoQ and 5% YoY. Grade B had the most primary sales for the 7th consecutive quarter, at approximately 2,940 units, accounting for a 44% share. Grade A absorption increased significantly with the highest proportion since 2011, registering approximately 1,590 sales.
The real estate market should remain stable despite a large future supply, with a focus on the mid-end and affordable housing segments, mainly from Hoang Mai, Thanh Xuan, Tu Liem and Ha Dong districts.
In Q4/2016, the Office Index was 61.5 pts, increasing 1 pt QoQ and 4.4 pts YoY. The improvements in the QoQ index were mainly due to increases in average occupancy of 1 ppt QoQ and 4.7 ppts YoY.
The CBD index was stable QoQ but up 2 pts YoY following average occupancy increases of 2 ppts on 2015. The non-CBD index maintained upward movement with gains of 1.7 pts QoQ and 6.2 pts YoY due to occupancy increases of 2 ppts QoQ and 5 ppts YoY.
In the next two years, a lack of future supply in the CBD will spur increases in the area’s average rent. In contrast, the surge of new supply in the non-CBD area offered tenants more choices and forced developers to adjust asking rents to more competitive levels.
Dinh Huong Linh
National Head of MarCom, Savills Vietnam
+84 4 3946 1300 - 112