The Real Estate Market Stagnates While the Rental Market Continues to Grow

Over the past two years, Vietnam's real estate market has witnessed a significant upward trend in prices, with average price growth ranging from 30% to 40%. However, transaction volume in the buying and selling sector has stagnated. In contrast, the rental market has shown clear growth, prompting investors to shift their attention to this promising sector. This is seen as a strategic move to ensure sustainable growth for investment portfolios.

Rising Demand for Rentals

According to a January 2023 report by Batdongsan.com.vn, searches for rental properties increased by 101% compared to the same period in 2022, despite a 4% decrease in rental listings. In Ho Chi Minh City, interest in apartments surged by 157%, while interest in dormitories rose by 107%. Similarly, in Hanoi, searches for apartments increased by 112%, and dormitory searches grew by 38%.

This growth in demand reflects accelerated urbanization and shifts in property usage preferences. Dormitories and apartments are no longer merely temporary living spaces but have become popular options for office needs and domestic tourism.

Moreover, the trend of using real estate as an income-generating asset is rapidly increasing. The rental market is attracting not only temporary workers and students but also startups and small business owners seeking flexible spaces to carry out their operations.

Significant Increase in Rental Prices

The surge in demand has directly driven up rental prices across various property types. In Ho Chi Minh City and Hanoi, the average rental price for apartments rose by 4% and 8%, respectively, compared to last year, reaching approximately 13 million VND per unit per month. Dormitory rents saw an even sharper increase, with a rise of 18% in Ho Chi Minh City and over 33% in Hanoi.

The increase in rental prices poses challenges for middle-income tenants but also creates substantial opportunities for investors who can capitalize on the value of rental properties. City center areas remain highly attractive due to their convenient locations and well-developed infrastructure.

Additionally, the rising value of rental real estate is drawing significant attention from local investors. Individual investors are actively seeking assets that provide stable passive income and potential for future appreciation.

Stagnation in the Buying and Selling Market

While the rental market shows numerous positive signs, the buying and selling real estate market in early 2023 has been described as lackluster, facing various challenges. Searches for private homes, street-front houses, land plots, and project land all declined by 56% to 66%, while listings dropped by 66% to 76%.

Statistics from Batdongsan.com.vn reveal that 456 new real estate companies were registered in January 2023, marking a 35% increase compared to last year. However, the number of companies temporarily ceasing operations rose by 54%, reaching 1,448, and the number of dissolved companies increased by 18%. These figures highlight the significant challenges faced by the sector in maintaining business operations.

Experts suggest that the market is currently undergoing a "restructuring" phase. Policies such as supporting low-interest loans or reducing real estate transaction costs could serve as levers to help the market return to a stable growth trajectory.

Prospects for the Rental Market

According to Dinh Minh Tuan, Director of Batdongsan.com.vn's Southern Region, in the context of a stagnant buying and selling market, investment capital will increasingly flow into products with rental development potential, such as apartments, street-front houses, and factories. These products are highly valued for their safety and accessibility to financing.

The accelerated pace of urbanization and population growth in city centers remain the primary drivers of increased demand for apartment and dormitory rentals. This trend is expected to grow significantly in the medium term, providing a foundation for individual investors to diversify their portfolios, especially in a market where the buying and selling sector has not yet fully recovered.