UK real estate service provider Savills reported an active property market in Hanoi in the last quarter.
"In contrast to many people's concerns at the end of Q1 about the macro economy and its impacts on real estate market, Q2 has actually been encouraging," Matthew Powell, Savills Vietnam's Hanoi Branch Director, said in the report published Wednesday.
"Q2 may be an interesting period because it is when important fluctuations have been adjusted in time by the market at the end of the quarter."
Savills recorded nearly 640,000 square meters of total office space, an increase of 4.5 percent compared with the previous quarter. Despite the supply increase, Hanoi's office for lease market was stable with average occupancy up about 2 percent for an overall occupancy of 86.7 percent.
Rent prices declined about 4 percent, according to the report.
The company predicted an increase in demand for office space in the coming months, but it warned that an anticipated oversupply in the next few years will "significantly affect the office market."
According to Savills, the primary apartment market was generally "not very vibrant" in the second quarter. Only 670 units were sold, accounting for 48 percent of the primary supply.
Meanwhile, the secondary market recorded no decrease in asking prices against the first quarter. "Investors have created a significant demand for [apartments], as property has seen a safe and attractive investment channel, especially after the closing of all gold trading floors as of the end of March 2010," the company said.
Savills estimates that the primary market may receive a new supply of 4,400 units from 14 projects in the second half.
As for the retail market, the average occupancy rate increased to approximately 95 percent, up 3 percent from the previous quarter, and rents in the central business district stayed high. Savills predicted demand for retail will continue to increase.
In a separate report released Monday, the company said Ho Chi Minh City's apartment market saw across-the-board price increases in the second quarter. The average price property price hovered at $1,370 per square meter, an increase of nearly 40 percent compared to Q1's $980, Savills reported.
Sixteen projects will add an estimated 5,800 apartments to the market in the second half of 2010, the company said, without forecasting on future prices.
Savills said total future supply for both office for lease and retail markets will rise. By the end of 2010, the office market is expected to receive about 20 office buildings with total 153,000 square meters, it said.