Ha Noi (VNA) – A significant number of buildings have been rising up in the My Dinh area, west of Ha Noi, and some experts are saying it will cause a redundant supply of hotels, offices, and apartment complexes over the next several years.
Last month, the Keangnam Group began work on a 1 billion USD hotel and apartment complex project on Pham Hung road in Ha Noi’s Cau Giay district.
Not far away, the Charmvit Company began construction on the Ha Noi Plaza, which will feature a 360 room hotel and 54,000 sq.m office building, while the Kumbo Group will develop the Me Tri exhibition complex. Both projects are estimated to have a total investment capital of 2.5 billion USD.
Twenty-three ha of land in front of the National Convention Centre have been reserved by a joint venture with investment from Japan and Singapore. The joint venture said it planned to invest about 235 million USD into apartment buildings in the area.
Japan’s Riviera Group is also eyeing the 4.3 ha area behind the convention center, where the company plans to build a 500 million USD hotel, office and apartment complex.
In the hotel field alone, the My Dinh area has lured in eight projects, with about 3,500 rooms, according to local authorities. In the office building market, besides the Viglacera Tower, which is already in use, nearly 500,000 sq.m will be available over the next five years, with new projects like Cong Tay, Vimeco, and Crown Plaza.
According to CB Richard Ellis Viet Nam, the projects will turn the area into a new urban centre, along with the Hoan Kiem and Hai Ba Trung districts.
“The advantage of the My Dinh area is that the infrastructure is in place and the land is cleared. There are very few areas like this in Ha Noi,” said CBRE’s Ha Noi Branch Director Richard Leech. “Therefore, it’s natural that development will push out towards the area.”
“And the city is in desperate need of more five-star hotels,” he added.
However, Alastair Orr Ewing, managing chairman of the Savills real estate consulter, is worried about the excessive supply of building spaces in the area over the coming years.
With current progress levels, most projects will be completed by 2010-12, he said. In such a short time and in such a small area, 500,000 sq.m of new office space is too much, compared to the current 300,000 sq.m of total office spaces now being leased in Ha Noi.
Due to over-supply, project operators will encounter hardships in the first years of operation and may have to cut rents in order to compete, Alastair commented.
The hotel area may see the same situation, with about 3,500 new rooms available in My Dinh in the 2010-12 period, he said.
“There will be an over supply of office space and it all happens in the next three years,” argued Richard Leech. “However, we doubt that it will all happen at the same time. Assuming the economy keeps up its current pace, these developments will come about in a longer stretch of time”.
Leech said it was difficult to estimate the absorption rate of the residential condos for sale in the area, but the company believes developers will get on well with their business here. “The experiences with The Manor and Vinaconex buildings (located in the area) are good examples of a new supply being quickly taken up by the market”.
“All of the new developments must provide a top quality product if they are to compete,” he stressed.
Dang Hung Vo, former Deputy Minister of Natural Resources and Environment said the capital city is now short of hotel and office spaces. “This is a weak spot for the country when calling for investment”.
“City authorities, however, must work out a thorough plan to approve building projects to assure a sufficient supply for the projected demand,” Vo said.-Enditem
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