But the suburbs would experience slower short- to medium term growth.

Savills second-quarter Ha Noi property report shows retail occupancy up 3 per cent to 95 per cent – with the highest rate in the CBD.

Ha Noi’s office occupancy rate increased 2 per cent against the first quarter to 86.7 per cent.

Rents in western Ha Noi were likely to trend down because of the new offices coming onto the market at the end of the year.

But demand for office space was increasing as businesses expanded and recruited more employees.

Stability

The occupancy of serviced apartments increased 1 per cent in the second quarter against the first quarter but average rents were unchanged.

Expatriate tenants, who dominated the apartment market, maintained stability, said Trung.

Trade agreements between ASEAN, Australia, New Zealand and China that become effective from January 1 could attract foreign companies and boost demand for serviced apartments, he said.



Festivals for the Ha Noi-Thang Long 1,000th anniversary at the end of the year would also attract more tourists and boost the hotel and retail markets.

Colliers International marketeer Khuat Huu Vu Trung forecasts that investors will focus on a price of about US$1,000 per sq.m by the end of the year to meet expected demand.

The market would stabilise further in the next few months after real-estate investors suffered heavy losses in April and May, he said.

CB Richard Ellis Viet Nam Company Ltd managing director Marc Townsend said Ha Noi had recorded a surge in registered foreign direct investment in the second quarter to $70 million in more than 75 projects.

The increase would boost the number of foreigners working for multi-national corporations and they would be prospective buyers and tenants for high-quality accommodation, he said.

Top property developers struggle with debt burdens

Real estate developers have become burdened with debt due to the frozen state of the market and high lending interest rates.

Le Tham Duong, head of the business administration department of the HCM City University of Banking, said many businesses would face bankruptcy if the Government did not take measures to jumpstart the real estate market.

During the 2008-09 financial crisis, many real estate companies were able to survive by relying on their accrued profits from 2006-07, but such profits were exhausted now, he said.

In a worst-case scenario, if companies defaulted on debts, banks would have to sell property assets pledged as collateral. This would send real estates prices plunging and cause more property firms to go bankrupt, said Duong.

Among 58 listed real estate firms posting first-quarter financial reports, the liabilities of Vincom were the highest, topping VND17.13 trillion (US$831.6 million), pushing its debt-to-equity ratio to 1.63 – doubling the average ratio of the entire sector during the period, according to the financial website vietstock.vn.

Vincom's earnings from its business operations in the first three months rose to VND202.6 trillion ($9.83 billion), 13.8 per cent more than in the same period a year ago. However, its financing costs also doubled those of last year, reaching VND295.65 trillion ($14.35 billion).

The company's net profit during the period was VND96.6 billion ($4.7 million).

Kinh Bac Urban Development Co (KBC) ranked second in total liabilities in the first quarter, with liabilities reaching almost VND6.23 trillion ($302.4 million). Its DER at the end of the period was 1.18.

KBC's interest costs in the first quarter were VND67.7 billion ($3.3 million), outstripping those of other companies operating in the sector.