According to a report by real estate consultancy CBRE, the first quarter of 2019 witnessed increasing hype of the landed property market in Hanoi. A total of 2,641 newly-launched units were recorded, the highest level of new supply in any quarter over the last three years. Despite the Tet break, sales transactions remained strong during the quarter. In particular, some projects in the western part of the capital have caught the eyes of foreign investors, displaying huge demand for the high-end property segment.
At a market update event for the first quarter of the year, Nguyen Van Dinh, deputy general secretary of the Vietnam Real Estate Association (VNREA), said that transactions for luxury residential properties are largely driven by overseas investors’ demands.
According to Vu Cuong Quyet, general director of Dat Xanh North JSC, at present, the supply of luxury properties is not keeping up with the demand of foreign investors. Thus, newly-launched luxury projects are quickly being snapped up by foreign buyers.
One of the most notable projects is The Zei invested by HD Mon Holdings in the My Dinh district of Hanoi. Although newly launched in the market, the project has already nearly reached the foreign ownership limit. With a high absorption rate, investors are coining it as the Zei phenomenon. Following a launch event in May, around 70 per cent of international investors have made deposits for the project.
Commenting on the attractiveness of the luxury property segment to foreign investors, Dinh said that foreign buyer demand for luxury homes in Vietnam has grown significantly since the Law on Housing officially allowed foreigners to own up to 30 per cent of the apartment volume in a building. In light of the strong demand, some have purchased luxury property projects for leasing, which are becoming a new trend in the real estate markets like Hanoi and Ho Chi Minh City.
This year, Hanoi’s real estate market is expected to see a huge supply of new apartments. According to real estate consultancy Savills Vietnam, more than 41,000 apartments will be rolled out into the market in 2019, mostly high-end properties. With this huge supply, the market presents plenty of opportunities for foreign investors. However, they are also becoming more selective in purchasing new projects when they have more choice available.
In addition to some familiar criteria such as location, quality, on-site amenities, and architectural style, foreign buyers also have other specific factors they look for in any potential project.
Dinh of the VNREA said that most homebuyers will choose projects by reputation and branding. In addition, these projects must provide high-quality standards and services.
Looking at The Zei phenomenon, one of the critical factors contributing to the impressive take-up is its strategic advisor Indochina Capital, the leading luxury property developer with 20 years of experience in Vietnam. As the strategic advisor and lead sales agent for The Zei, Indochina Capital is providing guarantees to the project to ensure its quality meets international standards.
In addition, The Zei is managed by France’s Artelia Group, one of Europe’s top engineering companies. Meanwhile, Canadian-based West Green Design is the landscape design firm for the project. The firm boasts a team of talented and experienced architects and designers who are members of associations for landscape architects in both the United States and Canada, plus points for The Zei in the eyes of potential investors.
The healthy take-up rate of 70 per cent of foreign investors looks to be reflecting the prestige of HD Mon Holdings, which plays a key role in persuading investors towards the project. Since its inception in the market, HD Mon Holdings has fulfilled the set of criteria to ensure its projects are on schedule to hand over to customers, and that the apartments are based on the exact design and planning.
On back of the credit tightening on real estate, homebuyers place more emphasis on the transparency and the potential of the projects as well as the prestige and financial capability of their investors, and only projects meeting these stringent criteria can receive bank guarantees.
Industry experts predicted that there will be a more growing demand for luxury properties among foreign investors in the coming time, with luxury projects by foreign developers drawing strong capital inflows and quickly reaching the foreign ownership limit.
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