After Apartments, Where Will the Cash Flow Gradually Redirect in Real Estate in Viet Nam?

After Apartments, Where Will the Cash Flow Gradually Redirect in Real Estate?

According to experts, in the context of the real estate market not fully recovering and supply still scarce, the apartment segment remains an attractive and low-risk choice for investors. However, when considering macroeconomic factors, the cash flow will gradually shift towards other types of real estate.

Apartments Still Leading the Market

With the economy growing steadily, the real estate market in Q2/2024 showed signs of recovery, with new supply and transaction volume increasing threefold and 2.4 times respectively compared to the previous quarter. Data from the Vietnam Association of Realtors (VARS) shows that in Q2, the primary market supply reached about 27,335 units, with approximately 19,747 new units launched. The market recorded over 14,400 successful transactions.

Currently, apartments remain the dominant segment, leading market liquidity with over 70% of the primary market supply and 75% of transactions. Newly launched apartment projects, mainly priced above 50 million VND/m² in Hanoi, have very high absorption rates, up to 90% shortly after launch. The average primary market price continues to rise.

Apartment Prices Remain Difficult to Reduce

According to VARS, primary market apartment prices remain difficult to reduce, especially with high-end apartment supply dominating, construction costs increasing, and investment in quality spaces and amenities. Commercial housing land in central and surrounding areas will continue to be developed by investors to meet the investment and actual housing needs of the "wealthy". Individuals with medium and low incomes will still have to rely on social housing.

Cash Flow Will Redirect

VARS believes that considering macroeconomic factors, the cash flow will gradually redirect to other types of real estate, especially those with favorable locations – the most crucial factor in real estate investment. Properties near central areas, in economically growing regions, closely linked with industry, commerce, and services; with convenient transportation, near schools, hospitals, shopping centers, and entertainment areas will have clear value appreciation potential.

Other Types of Real Estate

Properties in areas with development plans and effective planning, attractive investment policies, and strong investment in urban transport infrastructure will have significant value appreciation potential. However, it is necessary to understand the future development plans of these areas.

Products with clear legal documentation, already possessing red/ pink books or legal land use rights certificates, or developed by reputable investors with modern infrastructure and amenities will also attract cash flow. Products with high-end service ecosystems targeting elite communities are also highly valued.

Land - An Attractive Investment Channel

Land remains the "king" investment channel with attractive returns. Divided plots in areas closely linked with industry, commerce, services, with complete infrastructure, and reasonable prices will continue to attract investors.

Especially, auctioned land in urban and residential areas is clean land, free from disputes, already with red books, and complete infrastructure. Investors can easily build houses on these plots to rent out and generate monthly cash flow.

Recently, the auction of land plots in urban and new residential areas has increased significantly. Some localities have seen active land auction activities, with the number of applications skyrocketing and successful bid prices 20% to 10 times higher than the starting price. Cash flow will continue to pour into auctioned land as localities organize more auctions to boost budget revenues.