Oversupply of condominium to hit Hanoi's real estate market

Ample supply of 21,000 apartments is likely to bring about price reduction in the quarter 2 of 2012.

It is estimated that 21,000 new apartments will be brought onto the market in 2012, which is appealing to buyers but stressful for sellers, according to Colliers Vietnam.

Two years ago, Euroland high-end apartment building in the European-Vietnamese Overseas Village in Mo Lao New Urban Area (Mo Lao Ward, Ha Dong District) was built with twin 30-storey towers and hundreds of adjacent villas. However, it is now hardly recognised among five towers of 30-40 storeys under Mulberry Lane project and tSTC under Sword Lake Plaza project.

Not so faraway is Van Khe New Urban Area with Usilk City Complex with 13 towers of 25-50 storeys and Van Phu New Urban Area with Deawoo Cleve project of 15 buildings of 36-40 storeys that is expected to provide more than 4,000 apartments in 2014.

Quarter 1 2012 will be the time for delivering houses of plenty of projects that were kicked off since 2007-2008 when property market bloomed. In the meantime, the pressure from the government's orientation of economic restructuring has dramatically driven prices of many apartments in Hanoi down by an average of 10pct-15pct and even 30pct since quarter 3 2011.

According to Colliers Vietnam's report on the property market in quarter 4 2011, the number of offered apartments for rent as well as successful transactions hit record low.

Around 4,500 apartments are estimated to brought onto the market this quarter, 40% of which are high-end apartments and 47pct are mid-range ones. TSTC of affordable prices and small areas have attracted a great deal of buyers' attention.

Apartments' prices are likely to reflect the real value and affordable housing will be available in 2012, according to Colliers Vietnam.

Credit squeeze together with restrictions on non-manufacturing loans with a view to tame inflation is expected to bring about capital shortage, which may result in many property projects being delayed, mortgaged or sold. At a result, housing prices could drop further in the first six months of 2012.