Press Release

CBRE Releases Hanoi Quarterly Report Highlights

Q3 2022

October 12, 2022

Hanoi – October 12th, 2022 –

Hanoi Residential Market
In the first nine months of 2022, the total new launch of apartments in Hanoi slightly increased compared to that in the same period last year, though still significantly lower than pre-COVID-19’s levels. In particular, the total new launch during the first three quarters of the year was 11,805 units, up 3% y-o-y, of which Q3 2021 recorded 3,640 units launched, up 5% y-o-y. 59% of total new launch this quarter is from the West of Hanoi; meanwhile, the South ranked 2nd contributing 19% of total new supply. Macroeconomic factors that are shifting quickly, such as bank and debt financing restrictions, increasing interest rates, ongoing licensing issues amid various movements in the regional and global markets have caused developers to more cautious launching activities. New launch supply during the first nine months of 2022, thus, had not shown recovery signals compared to pre-COVID-19’s level. In terms of segment, there were only high-end and mid-end products launched in Q3 2022 with high-end segment covering 67% of the total new launch during the quarter. During the first nine months of 2022, the market continued to witness the shift toward high-end segment, in which, this segment covered around 59% of total new launch of the period.

Hanoi condominium, New launch supply


Source: CBRE Vietnam Research and Consulting, Q3 2022.

The number of sold units were maintained at a relatively positive level, reaching 3,624 units in Q3 2022. Although the number of sold units is lower than that of the previous two quarters, it is still 22.2% higher than the level recorded in Q3 2021 – the period when market was negatively impacted by COVID-19 restrictions.

In Q3 2022, primary prices of Hanoi condominiums averaged US$1,896 psm (net of VAT and maintenance fee), up by 23% y-o-y due to a higher share of high-end products in the total stock available for sale. Over the past two years, as new launch supply was maintained at moderate levels, various locations in the city have witnessed upgraded positioning and thus increased prices, especially in districts with large ongoing township developments such as Tu Liem and Gia Lam, where  average primary prices recorded during the review quarter were 62% to 82% higher than pre-COVID-19’s levels. 

Average secondary selling prices reached US$1,341 psm during Q3 2022, up by 14% y-o-y. Central districs such as Hai Ba Trung, Dong Da, Ba Dinh, Tay Ho recorded price growth of 8 – 16% y-o-y. This is the third quarter in a row average secondary prices have increased by 9% and above – much higher than recorded in the period before 2021 when price movements were commonly in the range of 2-4% y-oy.
 
Moving forwards, new launch supply by year end is expected to reach 18,000 – 20,000 units in Hanoi – lower than CBRE’s previous forecast due to delays of several projects. As the level of new launch supply is rather limited, the number of sold units is expected to exceed the number of units launched during the year. Average primary prices are expected to continue to increase at CAGR of 8 – 10% until 2024. 

For landed property segment, there were 4,918 units launched from 10 projects in Q3 2022, the majority of which came from Vinhomes Ocean Park 2 – The Empire project. Many new products released in this quarter belonged to projects with high-end positioning developed by reputable developers such as Vinhomes and Bitexco, therefore average primary prices were recorded at a high level of $8,462/sqm, equivalent to a 36% increase compared to the prices recorded in the same period last year. Secondary prices continued to move up, registering price increases between 18-25% y-o-y depending on locations and segments. 

Total new supply of landed properties in 2022 is expected to reach almost 11,000 units, two to three times higher than typical annual supply volume between 2017 and 2021.  After two quarters of notable supply from Vinhomes Ocean Park 2, the last quarter of the year expects new supply coming from yet another Vinhomes development named Vinhomes Ocean Park 3 – The Crown Dai An Project, also in Hung Yen province bordering Hanoi to the southwest. Current macro headwinds including tighter loan conditions and rising interest rates would put upcoming new launch to test, especially as asset prices have enjoyed a high growth period over the past few years.

Notes on CBRE condominium ranking criteria:
1. Ultra-luxury: projects that have primary prices over US$12,000 psm
2. Luxury: projects that have primary prices from US$4,000 psm to less than US$12,000 psm
3. High-end: projects that have primary prices from US$2,000 psm to less than US$4,000 psm
4. Mid-end: projects that have primary prices from US$1,000 psm to less than US$2,000 psm
5. Affordable: projects that have primary prices under US$1,000 psm

Average Primary Price: US$ psm (excluding VAT and maintenance fee, quoted on NSA), including all projects available for sales


Hanoi Office Market

During 9M 2022, the Hanoi office market welcomed one Grade B project in the West area, with a total NLA of 22,000 square meters. The overall office supply in Hanoi had exceeded 1.623 million sqm NLA by the end of the review period, with Grade A projects accounting for 37% of total supply. Due to relatively limited supply, the Hanoi market recorded only a moderate net absorption rate of more than 27,000sqm. As new supply is expected to be added to the market over the next 3 months, net absorption is likely to improve.

Following the improvement of market performance from the previous quarter, rents in Q3 2022 continued to increase. Specifically, in Q3 2022, Grade A office asking rents reached US$26.0/sqm/month, up 0.6% q-o-q and 6.0% y-o-y. Likewise, Grade B office rents increased by 0.6% q-o-q and 3.2% y-o-y, to US$14.4/sqm/month. 

Vacancy rates of existing Grade A office buildings decreased, with Grade A offices seeing vacancy reduced to 28.2%; down 0.5 ppts q-o-q and 4.0 ppts y-o-y. Meanwhile, as Grade B welcomes the opening of one new office project in the Cau Giay District, the segment's vacancy rates have increased to 11.9%, slightly up by 1.6 ppts q-o-q and 0.4 ppts y-o-y. 

The reported rents and vacancy rates of Grade A offices in Hanoi includes the impact of the Technopark Tower which is located in a rural location in Hanoi. Excluding this project, average rents and vacancy rates of Grade A would have been US$28.9 and 16.0%, respectively. With positive occupancy rates and positive rental growth observed across buildings and grades, CBRE anticipates a ”fligth to quality” move among tenants; in fact, Grade A offices in the CBD started to see rising vacancy rates as tenants relocated from older Grade A buildings in the CBD to newer buildings elsewhere.  

Hanoi Office Market, Market Performance (*)


(*) Asking rents and Vacancy rate of Grade A office includes the impact of TechnoPark Project since Q3/2021
Source: CBRE Vietnam Research and Consulting, Q3 2022.
Asking Rents are quoted excluding VAT and Service Charge


In terms of demand, office expansion demand continued to contribute to the majority of CBRE transactions in Hanoi, accounting for more than 62% of total transactions. IT/Tech continued to dominate the market, accounting for 59% of all transactions in Hanoi. With good financial resources, the proportion of this group of tenants is gradually increasing with the rental area up to over 1,000 m2. 

In the last three months of 2022, the Hanoi office market is scheduled to welcome three Grade A office projects and one Grade B office project, bring total new supply during 2022 to 103,600 sqm NLA. Rents in Grade A are anticipated to rise by 1% to 2% from now to the end of year as a result of the new supplies being developed by reputable developers and equipped with high-quality specifications and modern amenities. Abundant supply is also anticipated to put pressure on vacancy rate as well. Rents in Grade B are expected to remain stable.

Hanoi Retail Market

In the first 9 months of 2022, Hanoi retail market continued its growth momentum and strong recovery after Covid-19 pandemic. According to the General Statistics Office, total sales of consumer goods and services. In the first 9 months of 2022 in Vietnam was estimated at VND 4,170 trillion, posting a 21% growth y-o-y and a 14.2% increase compared to pre-pandemic level in 2019. 

Retail Hanoi, Market Performance


Source: CBRE Vietnam Research and Consulting, Q3 2022.
Asking Rents are recorded on first & ground floor and quoted excluding VAT and Service Charge


In Q3 2022, Hanoi market recorded no new supply. Total net leasable area (NLA) of Hanoi Retail market accumulated in the first 9 months of 2022 remained at 1,064,739 sqm.

In terms of market performance, rents in both CBD and non-CBD locations in Hanoi continued to record significant growth. Specifically, asking rents on the ground floor (excluding VAT and service charges) in CBD area reached US$ 144/sqm/month, up 9.0% q-o-q and 39.5% y-o-y. This is the highest level of rents ever recorded in CBD locations. Vacancy rates in the CBD area saw relatively little difference as the number decreased 0.6pt compared to the same period last year. For non-CBD locations, recovery has been going strong with asking rents posting strong growth, reaching US$ 27/sqm/month, equivalent to a 6.9% increase q-o-q and 14% increase y-o-y. Non-CBD vacancy rates slightly went up by 0.4pt y-o-y.

The retail market this quarter welcomed new luxury and boutique brands making its debut in Vietnam and Hanoi market. Brands including Breitling, Marc Jacobs and Berluti took turns to open their first-ever stores in Vietnam (in the case of Marc Jacobs, first store in Hanoi) at prime locations on Ly Thai To and Trang Tien Street. Meanwhile, existing retailers such as Aeon MaxValu, Annam Gourmet, Mothercare, Lyn,… continued to expand their presence in Hanoi by opening new stores at major shopping centers such as Lotte Center Hanoi and Vincom shopping malls. 

It is expected that in Q4 2022, there will be an additional supply of 19,000 sqm NLA of new retail space from The Zei (Tu Liem District) and Hinode City (Hai Ba Trung District), and as much as 300,000 sqm of NLA of retail space put into operation by 2024. The majority of these projects are concentrated in non-CBD area, of which two large-scale projects, Lotte Mall Hanoi and Aeon Mall Hoang Mai, are expected to provide a total of more than 150,000 sqm NLA of retail space in 2023-2024.

Looking forward, CBRE anticipates that retail spaces at prime locations will remain highly sought after in the coming time with sustained demand for rent, leading to further rental growth prospects in this area. In addition, brick-and-mortar stores will be required to continue to focus on facilitating consumer experience by integrating in-store utilities and enhancing online order fulfilment capabilities, a trend already evident within the F&B sector.  However, concerns about inflationary pressures may dampen market outlook of the retail sector as costs of raw materials, production costs and consumer goods prices have been rising, affecting consumer spending and consumer confidence, especially for non-necessities goods.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.