In the real estate sector, Hanoi has appeared to become a key part of Vietnam’s growth story as the city has “its own attractions”, according to global real estate services provider Savills.
|Hanoi has its own attractions. Source: Savills|
With more than 1,000 years of history, Hanoi is Vietnam’s cultural center as well as its administrative hub, Savills said in a recent analysis.
The French colonial era left Hanoi with a number of historic buildings and tree-lined boulevards that have garnered it the title of the Paris of the East. The population of 8.1 million doubles if the nine surrounding provinces are taken into account.
In addition, Hanoi benefits from Vietnam’s thriving economy: 2019 GDP growth was 7.02%, above the 2019 government target of 6.6% to 6.8%. Retail sales were US$163 billion, up 13% on year.
Troy Griffiths, deputy managing director of Savills Vietnam, said “Hanoi offers a wealthy population by Vietnamese standards and that population is growing rapidly. The city’s infrastructure is rapidly evolving, with metro lines, roads and bridges which will improve connectivity and boost real estate values.”
Meanwhile, the city’s stock of modern real estate is growing and domestic developers are maturing to deliver international grade assets, Griffiths adds.
|Hanoi's apartment sales in 2015-2019. Source: Savills Research & Consultancy|
Last year, Japan’s Sumitomo Corporation joined forces with Vietnam’s BRG Group to develop a 272-ha smart city in Dong Anh district, north of the city center. The extension of Metro Line 2 from central Hanoi to Noi Bai International Airport will pass through the project site, which will be home to a new station.
Other foreign developers and investors active in Hanoi include Keppel Land, CapitaLand, Mitsubishi Estate, Gaw Capital Partners and Hongkong Land.
The city’s growing population fuels demand for residential property. Apartment sales rose 26% to nearly 40,000 in 2019, with new supply of 37,700 units. Supply looks steady, with 124,000 units to be delivered over the next three years. Prices are around 30% lower than in Ho Chi Minh City. Supply of new villas and townhouses was limited last year but more is expected over the next two years.
Hanoi’s retail stock grew 14% to 1.6 million square meters (sq.m) in 2019 and rents fell 1% over the year, despite almost full occupancy in all retail types. The office sector grew by 10% to 1.8 million sq.m and average rents rose 5% in 2019. Vacancy in B and C grade offices is almost zero. A total of eight projects, comprising 169,000 sq.m will be completed this year.
The city has 9,800 rooms in 65 hotels, with a further 1,200 to be delivered this year, while 48 projects with 9,100 rooms are in the pipeline.
Hanoi is Vietnam’s most popular tourist destination and the 15th most visited city in Asia Pacific, according to research by Mastercard.