Cantonese flee pricey realty to Hanoi
With their home only a two-hour flight away, investors of luxury apartments from Hong Kong are now looking to the emerging city of Hanoi, where accommodation is cheaper than elsewhere in the region.
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Van Dang, a guide who speaks fluent Cantonese and English, has already taken more than 10 groups of visitors from Hong Kong to Hanoi this year. The 35-year-old guide told VIR that the number of Cantonese seeking realty in Hanoi has been “higher than ever in several years.”
Speaking to VIR, Alan Kan, committee member of the Hong Kong Business Association Vietnam (HKBAV), stated that as the prices of Hong Kong properties have risen to unaffordable levels, many are turning to investing in cheaper cities, for example in Vietnam and Thailand.
In the Global Property Guide, Hong Kong’s property market has been rated the least affordable internationally, for the eighth year in a row. Average home prices were 19.4 times the gross annual median household income in 2017, compared to 18.1 times in 2016, 19 times in 2015, 17 times in 2014, and 12.6 times in 2013.
For houses over 160 square metres in Hong Kong’s popular district of Kowloon, costs could reach more than US$46,000 per sq.m. Meanwhile, the same luxury residence in Hanoi’s city centre – a market where prices have risen by 50% over the past decade – costs about US$2,000 per sq.m. Hanoi’s prices are also much lower than those in Bangkok, where equivalent properties can cost up to US$7,000-9,000 per sq.m.
HKBAV’s Kan noted that “currently, Vietnam is the hottest country in the region.” He added that China’s Belt and Road Initiative will position Vietnam as one of the first countries to benefit due to its location and stable political environment, thus making it a hub for both land and sea transport and attracting further investment to the country.
In contrast to the low prices for luxury apartments, the latest predictions from the World Bank expected Hanoi to reach 7.3% in GDP growth this year thanks to the expanding manufacturing industry. In the year’s first two months, Hanoi lured in US$109 million in foreign direct investment (FDI), according to the Hanoi People’s Committee.
In addition, a series of major infrastructure improvements are also under way in the city, where six metro lines are on schedule for completion soon.
Alongside Cantonese investors, many the Republic of Koreans have also settled in Hanoi with the impressive industrial expansion of Samsung, which already employs 45,000 workers and brings a growing number of the RoK expatriates to the city.
As of the end of 2017, Hanoi attracted an accumulated US$27.64 billion worth of FDI with rising investment from Japan, which ranked second in accumulated registered capital, below Singapore and above the RoK. The high influx of FDI from these countries is not only channelled through the capital city, but also through the neighbouring provinces of Vinh Phuc and Thai Nguyen, with the presence of Samsung.
The arrival of these companies is accompanied by high-income employees, who are in need of decent accommodations to rent. The gross rental yield was between 4.5 and 5% in Bangkok and much lower in Singapore, Kuala Lumpur, and Hong Kong, according to data from Hong Kong-based Golden Emperor, which recently hosted a two-day realty seminar on Hanoi’s property.
Golden Emperor also emphasised that Hanoi was the most promising city for investment in 2018. At the event, they introduced the Zen Residence in Hanoi’s Hoang Mai district, developed by Gamuda Land Vietnam, a listed real-estate developer from Malaysia.
Golden Emperor believes that investors in the city can expect a safe and secure long-term investment environment with good potential for capital appreciation.
