Cold Storage

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Market in Minutes: Ha Noi’s Secondary Hubs Heat Up

Ha Noi’s suburban areas are growing. Not only is there an abundant supply of apartments, but prices in suburban districts are lower and residential properties will be supported by ongoing infrastructure projects.

Ha Noi’s suburban districts are heating up. This is abundantly clear with the rising supply levels in these areas. According to Savills Q3/2021 market report, 7,900 apartments from 11 new projects and the next phases of two projects were expected in the last quarter. While land bank and supply in the core is limited, Tu Liem, Gia Lam and Hoang Mai districts will have more than 80% of the new supply. Western Ha Noi still leads primary supply with 29%.

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Over the last five years, there has been a big increase in the amount of supply suburban districts hold. In 2017, Hoai Duc and Thanh Tri had 6% of city supply. However, by the end of 2021, Hoai Duc, Thanh Tri, Gia Lam and Dong Anh will provide 30%. Five suburban districts (Hoai Duc, Dong Anh, Thanh Tri, Gia Lam, and Dan Phuong) are key to future residential supply thanks to their large land banks. From 2023 onwards, these districts will account for 36% of the supply.

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Apart from the growing supply, price is a major driver of the increasing suburban demands. More than half of the transactions in Q3/2021 ranged between US$1,500/m2 to US$2,000/m2; most of these transactions came from projects in outlying districts such as Tu Liem, Long Bien, and Gia Lam. This is much lower compared to more central districts such as Hai Ba Trung, Ba Dinh, and Cau Giay that recorded asking prices of over US$3,000/m2 or Dong Da and Tay Ho with prices from US$2,000/m2 to US$3,000/m2.

The shifting trend in the market is also stimulated by the development of infrastructure. Ring Roads and Metro lines improve the connection between districts and will make moving between the suburb and the inner city easier. This is a hugely enticing factor for those looking to buy suburban apartments.

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Evaluating the investment potential of suburban real estate, Ms. Le Thi Phuong Lan, Head of Investment at Savills Ha Noi, shared: “When people invest in property, they will spend money with the expectation that its price will increase in the future. Therefore, what determines investment decisions is the growth potential rather than the current advantages a property has. Properties in the inner-city already reflect the current strengths the area has to offer. However, as investments tend to go where investors believe fundamental changes will happen, suburban real estate will be increasingly popular.”

Ms Lan continued, “Investors should pay attention to long-term returns. They must consider the development potential, planning, and infrastructure of the area."

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