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Ha Noi real estate prices plummet in Q2   2009-07-26 - Vietnam News

The Trung Hoa-Nhan Chinh residential area in Ha Noi is among properties affected by the asking price for residential real estate rising modestly during the second quarter.

Commercial real estate prices plunged in Ha Noi during the second quarter of the year, according to a report from property consulting firm CBRE Viet Nam.

The firm cited declines in both exports and raw material and equipment imports as an indicator of slower industrial growth that is likely to last for a few more quarters as factors having a direct impact on the amount of capital being poured into the real estate market.

The trend could be most clearly seen in the office rental market, it said.

During the second quarter, rents of Grade A office space fell by 5.6 per cent to an average of US$46/sq.m, while those of Grade B office space dropped by 19.1 per cent to $26.

"The drop in Grade B rents comes from the reduced rents of buildings launched in 2009 which, when excluded, leaves only a 7.7 per cent drop in rents for stabilised grade B buildings," the CBRE said.

Grade B vacancies also rose from 5 per cent during the same quarter a year ago to 22.1 per cent this past quarter, even though only one new Grade B building, Plaschem Plaza, appeared on the market. Grade A buildings, meanwhile, saw a 2.84 per cent rise in vacancies.

Rents for retail space in shopping centres also dropped during the second quarter. Average rents stood at around $54/sq.m with ground-floor rents at about $90. Rents outside the central business districts dropped by 5 per cent to $34/sq.m.

The trend for many retailers was to lease a shop on a street, not in a shopping centre, said CBRE managing director Marc Townsend, and shopping centres outside the central business districts were having a hard time maintaining tenants.

"While central business district shopping centres remained over 99 per cent occupied, non-business district shopping centre vacancy grew from 33 per cent in the first quarter to 44 per cent in the second quarter," the CBRE reported.

Serviced apartment and hotels were among the most severely affected last quarter by the global recession as fewer foreign visitors and workers came to the country.

Average rentals for serviced apartments dropped to $28.77/sq.m per month, down 12 per cent from the same quarter a year ago, although the situation in Ha Noi was better than that in HCM City due to a greater number of workers from foreign non-governmental organisations not as strongly affected by the recession, Townsend said.

Hotel occupancy rates were down across-the-board, however.

Occupancy rates of five-star hotels fell by 15 per cent year-on-year to just 50 per cent. For three- and four-star hotels, occupancy rates were down 25 per cent to 39 and 43 per cent, respectively.

Residential real estate was the only bright spot in the Ha Noi real estate market during the second quarter, with the Government’s subsidised-interest loan programme spurring a rise in lending and encouraging sales in the sector, the firm said.

Asking prices for residential real estate rose during the second quarter after four consecutive quarters of declines. Asking prices in the luxury market increased by 2 per cent over the first quarter, while high-end and mid-range projects saw prices rise by 4-5 per cent. The low-end market saw an even brisker 12-per-cent rise, the CBRE reported.

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