Vietnam’s capital city Hanoi has a rapidly-growing population that is currently approaching 3.5 million and things are getting a little cramped. As a result of the white-hot economy and Hanoi property supply consistently falling short of demand, competition for residential and office space is fierce, and both rental rates and unit purchase prices are sky-rocketing.
Supply is so short that experts have suggested that at present, someone looking to rent new grade A office space in a central location would face a one to two year wait.
The serviced apartment market in the city is experiencing similarly limited supply and high rents (about US$19 to US$50 per square metres a month). Experts say however, that the bubble will last until the end of the next year when supply and demand will reach a relative equilibrium.
Renovating in Hanoi property
Like elsewhere in the country, the option of renovation has not proved to be a particularly attractive option for developers thus far, with major players in the real estate market appearing disinclined to renovate run-down apartment blocks as a means of generating profit due to a variety of bureaucratic obstacles. However, the government is aiming to take on the bulk of these projects itself, and announced a nation-wide project which aimed to fix all run-down apartments. It demanded progress reports be submitted by the various provinces, outlining what was planned for the dilapidated buildings in their areas in order to comply with the deadline.
With foreigners currently not allowed to buy property, restoration projects are somewhat beyond their reach. However, with the relaxation of ownership laws, opportunities opened up. As with elsewhere, any venture of this type should begin with a structural survey report from an experienced property assessor/surveyor to ensure there are no hidden problems with the building. Two key issues with run down buildings in the city is that most apartments of this vintage, usually ranging from four- to five-stories high, do not include elevators or possess standardised fire protective systems.