Hanoi property prices to drop in 2012: CBRE

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A growing supply on Hanoi's real estate market this year will push prices down in various sectors, including residential, office and retail, said a manager at propery firm CB Richard Ellis.

CBRE Vietnam Managing Director, Marc Townsend, said the past three years saw rising prices in Hanoi, but residential prices in the capital city will start leveling off, following a trend already seen on the Ho Chi Minh City market.

He said the total number of unsold units in Hanoi stands at 16,000, while as many as 22,000 new units are expected to be added this year.

This means more competition and more vacant retail space, Townsend said in a statement.

"The office sector, in particular, saw a massive supply of over 128,000 square meters in 2011 in the western area, driving vacancy to a record of 48 percent in the west, and 27 percent market-wide. With this vacancy to fill up and a further 200,000 square meters expected to come on stream in this area in 2012, office rents are set to drop further in order to induce tenants to relocate and expand," according to the statement.

Townsend also predicted an increase in vacancy among hotels and serviced apartment projects in west Hanoi due to new supply.

On a positive note, he said international investors have maintained their long-term interest in Hanoi's real estate market.

"The past 12 months has seen a growth in institutional investment deals in Vietnam, with notable transactions occurring for foreign investors. We believe that these deals will pave the way for further activity in the years ahead, with 2012 being no exception," Townsend said.

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