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Vietnam Real Estate Report Q1 2011
Business Monitor International, Jan 2011, Pages: 70
Vietnam Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Vietnam's Real Estate industry.
Vietnam’s commercial real estate market has been overshadowed by a property glut. Rental rates fell bydouble-digit rates through 2009 – in each of the three cities for which we gathered data (Hanoi, Ho ChiMinh City and Da Nang) and across all three sub-sectors. Vacancy rates are generally running at around30%.
Normally, in an economy that has been growing so quickly that the authorities are tightening both fiscaland monetary policy in order to curb inflationary pressures, rents and capital values would fall until muchof the vacant space is absorbed.
Although the government intervened to re-regulate the commercial real estate sector in early 2010, it wasnot clear that this process of adjustment was under way in Vietnam. At present there are clear signs thatthe market is stabilising but uncertainties still remain. Our in-country sources indicated that Da Nangoffice and Hanoi industrial rents had increased dramatically since 2009. Elsewhere, rents trackedsideways or rose by single digit amounts.
Looking forward, our sources anticipate that rents will continueto move sideways through 2011 before picking up towards the end of the forecast period in 2015. Theyare less optimistic about the prospects for higher rents in Hanoi than in Ho Chi Minh City or Da Nang.Our view is that the government has allowed market forces to operate in at least some of the market. Oneof the key findings from our mid-2010 interviews was that yields had risen sharply in the office andindustrial sub-sectors of Hanoi and Da Nang. The implication is that there has been a major adjustment inthese sub-sectors – in the form of a slump in capital values.
It may well be that 2010 comes to be seen as the year in which the key trends in Vietnam’s commercialreal estate sector became much clearer. A substantial over-supply of property is being absorbed –although official intervention is still preventing across the board adjustments in rents, yields and capitalvalues. Conditions in particular sub-sectors remain volatile – but yields are in general likely to movesideways or downwards over the coming four years.
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