Hanoi: old flats’ prices surprisingly rising

July 24, 2009

It may seem improbable, but in Hanoi, the older that flats are, the more expensive they are getting. The prices of old flats in areas in the inner city have increased by two-fold in the past few months.

The older that flats are, the more expensive they are getting

Nguyen Van Thanh, the owner of a flat on the third floor of B1 Giang Vo apartment bloc, said that earlier this year, some people asked to buy his 45 square metre at 500 million dong, but he did not sell. With such a sum of money, he would not be able to purchase a new apartment, even if the apartment was located far from the centre.


However, Thanh said that more and more people have come to ask him to sell the flat, and they are offering more and more money. The highest offer has reached 1 billion dong. With one billion dong, Thanh would be able to purchase an apartment anywhere, but he still does not want to sell.


Not only Giang Vo B1 apartment bloc, many other old apartments in Hanoi are also being hunted by people, which has pushed prices up to unbelievably high price levels. The prices of flats at Ngoc Khanh, Nam Dong, Lo Duc, Thanh Cong and Nghia Tan have increased by two-fold over late last year.


Despite the rapidly rising prices, the ratio of successful transactions is very high. This thing proves to be quite different from that in other market segments, where prices increase but very few transactions succeed.


Explaining the sharp price increases, analysts say that people do not purchase the flats for their accommodations. They aim to enjoy the benefits the owners of old flats enjoy when flats are upgraded under the city’s plan of clearing off old flats in Hanoi.


The owners of old flats are able to have flats with 30-50 percent more area than the area of old flats. Moreover, they have the right to purchase more apartments from investors at original prices.


Meanwhile, most old flats are located in advantageous positions. Therefore, though apartment prices have doubled, far-sighted investors still find it wise to purchase old flats.


Basic apartments luring customers


According to CB Richard Ellis (CBRE), a real estate consultancy service provider, though the Hanoi real estate market has been rising in the last many months, the price of luxury apartments has risen by two percent only and medium-class apartments by 4-5 percent. Meanwhile, the prices of basic apartments (less than $1,000 per square metre) have increased by 20-30 percent.


However, there are not basic apartments in the inner city. In order to purchase such apartments, people have to look in areas far from the centre like Van Khe, Xa La, La Khe (Ha Dong) and Viet Hung in Gia Lam district.


The prices of these apartments have been increasing rapidly because the high demand for the market segment. The apartments prove to be affordable for the majority of customers; therefore, they have the highest liquidity.


Regarding the leasing office market, CBRE said that the A class office has seen the fee down by 5.6 percent to $46 per square metre. Meanwhile, the B class office leasing fee has decreased by 19.1 percent.


Trong Tuyen


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