Rental properties are sluggish, this is the 'golden' time to put down money, should you buy an apartment to 'surf'?

Now is the right time to invest, rental houses are unsold, the number of openings for sale is the lowest in the past 10 years, the cost of making a red book will change when the Land Law (amended) comes into effect... are the latest real estate news.

Once the “bottom” of the real estate market has been determined, it is an opportunity for investors to put money down. (Source: XD Newspaper)

The "golden" time to invest?

According to VietNamNet , Mr. Le Dinh Chung, General Director of SGO Homes Real Estate Investment and Development JSC, assessed that for individual investors, this time, when interest rates have dropped sharply, gold prices are still high; while the real estate market has shown signs of recovery... this is the "golden" time for investors to research "putting money" in markets further away from Hanoi or in big cities.

Mr. Chung said: “By 2025, when all three laws of Real Estate Business, Housing Law and Land Law come into effect; the real estate market will turn a new page; prices of existing real estate products will increase. Investing at this time, investors have the right to choose products with suitable prices and legal completion.”

Meanwhile, Mr. Nguyen Anh Que, Chairman of G6 Group, said that the Land Law, Housing Law and Real Estate Business Law mark the end of the previous cycle and the beginning of a new cycle.

This can be called the “bottom” and is gradually entering a new period. Once the “bottom” of the real estate market has been determined, investors with available money should buy.

However, according to Mr. Que, the market will be divided into 3 types of investors.

“For investors with 100% money, this is the time to buy real estate. However, for investors who “catch thieves with bare hands” or use too much financial leverage, this is not the right time to invest because liquidity is still poor, at least for the next year.

As for professional real estate investors, using moderate leverage, about 30 - 50% and still having a plan to sell in a short period of 3 - 6 months, still ensuring a capital gain of about 10 - 30%, they have entered the market since the beginning of 2023. Therefore, it is difficult to say whether this is the right time to invest or not, but it also depends on the financial issues, experience of each investor and each segment", Mr. Que analyzed.

SGO Homes General Director Le Dinh Chung said that this year, the high-rise and low-rise segments in big cities are still very attractive to investors. However, with apartments like in Hanoi, prices have increased by 15-20%, although there is still room for investment, the investment value is large. The minimum level is 3 billion VND for apartments or 6 billion VND or more for low-rise, so this will not be a common segment for everyone.

“In 2024, the land segment, which has the lowest price, will start to increase again, attracting more investors due to its suitable value, guaranteed legal status and also being the most optimal choice at this time. Therefore, the land market will have many positive factors, with clearer signs of growth.

Currently, this is the segment with the deepest price reduction, so buying land at this stage will be one of the advantages. When the market recovers, along with new regulations of the laws that will take effect from the beginning of 2025, new projects will have high prices," Mr. Chung assessed.

Meanwhile, the Chairman of G6 Group analyzed that at the present time, it is not advisable to invest in resort real estate, the reason is that it will take a very long time to make a profit. Or with apartments, at this time, buying for rent is too high, the capital recovery period is about 25 years. Buying apartments for "surfing" is not suitable at this time.

“The situation is similar for shophouses and podiums, the ability to rent out to recover capital also takes a long time. As for industrial real estate, investing and then renting or reselling, there is still room but it is no longer as “fertile” as in the 2018-2023 period because the price is already high,” said Mr. Que.

With experience in the profession, this leader believes that in every real estate cycle, there are two “king” segments. Those are land and commercial centers, townhouses.

“Land has low value, high capital gain expectations, and high liquidity. Shopping malls or townhouses are the investment segment for rent, the “king” segment at the end of the cycle,” Mr. Que assessed.

However, when investing in this period, the leader of G6 Group noted that investors need to pay attention to planning issues.

“You should only buy real estate in places with stable planning or in advance of planning if you really have the information. When choosing the location of the investment product, it should be associated with residential or resort areas. If the real estate is not associated with these factors, it is just speculation, “surfing” investment, and the risk for investors when wanting liquidity is very difficult,” Mr. Que noted.

Mr. Chung noted that when investing at this stage, investors need to pay attention to choosing products with full legal documents, choosing markets around Hanoi but closely linked to industrial parks, residential areas and products that aim at living values ​​for residents, with full amenities such as schools, parks, hospitals, convenient traffic connections, etc.

Lowest opening volume in the past 10 years

In terms of total new housing supply and demand in 2023, CBRE's figures are showing not-so-positive signals, especially at the beginning of the year. However, both Hanoi and Ho Chi Minh City have the lowest amount of new launches in the past 10 years.

The unit's recent market report shows that the housing market in Hanoi and Ho Chi Minh City both recorded the lowest total supply of new launches in 2023 in the past ten years.

Specifically, in Hanoi, a total of nearly 10,300 new apartments and 2,600 low-rise houses were newly launched for sale this year, down 32% and 84% respectively compared to 2022. Meanwhile, Ho Chi Minh City recorded a more modest supply with more than 8,700 apartments and only nearly 30 new low-rise houses, down 54% and 98% respectively compared to 2022.

Regarding absorption rates, the Hanoi and Ho Chi Minh City markets recorded more than 22,000 sold houses (including high-rise and low-rise) in 2023, only approximately half of the number sold in 2022.

Similarly, a recent Savills market report showed that Hanoi's villa and townhouse transactions in 2023 recorded only 359 units sold - the lowest number since 2014. In addition, the total number of transactions decreased by 76% year-on-year and the absorption rate also decreased by 31% year-on-year. In the fourth quarter of 2023 alone, only 64 units were traded, down 67% year-on-year.

Notably, despite sluggish sales, new prices for townhouses in Hanoi continued to increase. The strongest increase was in primary villas, up 55% quarter-on-quarter to VND160 million/m2. In addition, townhouse and shophouse prices also increased by 3% quarter-on-quarter, reaching VND194 million/m2 and VND328 million/m2, respectively.

Previously, the Ministry of Construction also stated that the selling price of villas and townhouses in Hanoi remained high despite low transaction volume. This segment recorded selling prices of more than VND100 million/m2, with some projects even reaching over VND300 million/m2, mainly concentrated in the western part of Hanoi. Or in Ho Chi Minh City, the selling price of villas and townhouses in some areas fluctuated from VND140-400 million/m2.

Ms. Do Thu Hang, Senior Director, Research and Consulting, Savills Hanoi, said that in 2023, the number of villa and townhouse transactions in Hanoi was the lowest in nearly 10 years. The reason was the low supply on the market, leading to a low number of units traded.

According to Ms. Hang, the primary supply reached more than 700 units from 16 projects, down 23% year-on-year, of which townhouses accounted for the majority of the market share with 44%. If we only count new projects, the whole year of 2023 recorded only more than 270 units, down 82% year-on-year and down to the lowest level in 10 years. In particular, the number of new projects from Ring Road 3.5 onwards is also increasingly small.

In addition, the high cost of inventory also causes most investors to not change prices, and even continue to increase the selling price of new baskets.

According to Ms. Hang, high selling prices have created a big barrier for low-rise home buyers. Many investors are hesitant to offer prices lower than expected, so buyers have to pay a rather high opening price.

House for rent is not available

Many landlords and landlords admit that it is very difficult to find tenants near Tet.

Regarding this phenomenon, some real estate brokers said the main reason is low demand for store space when business is difficult. Meanwhile, a large amount of real estate that cannot be sold at the expected price is being transferred to rent, both for the owner to earn more cash flow and to hold out until the end of the year to continue looking for buyers after Tet.

A recent real estate market report from a unit shows that the number of real estate rental listings on the entire site increased by 21% compared to the previous month and 2% compared to the same period last year. The product with the most rental listings last month was boarding houses with an increase of 58% compared to the previous month.

In contrast to rental demand, real estate rental demand has not improved, continuing to decrease by 6% compared to the previous month and 14% compared to the same period in 2022. The trend of decreasing rental demand is strong in all types of apartments, private houses, townhouses and shops with a decrease of 5-14% compared to the previous month.

Notably, in Hanoi, the demand for real estate rental increased as the number of ads for this segment increased by 7%. However, the demand for rental decreased by another 2%. The rental trend decreased sharply in almost all types, with rental of townhouses in Hanoi decreasing by 18%, rental of apartments in Hanoi decreasing by 8%, boarding houses decreasing by 15% and offices decreasing by 11%.

According to many real estate experts, the real estate rental market is expected to face many difficulties this year as the economy is facing challenges and real estate still needs a long time to recover. However, the difficulties will gradually decrease over the months, with growth returning in types that meet the rental needs of the majority such as apartments and townhouses.

Mr. Dinh Minh Tuan - Director of Batdongsan.com.vn - said that apartments for rent and boarding houses will continue to operate stably because the demand for these two types is still very large.

For apartments, projects located near the center, with rental prices of 7-15 million VND/month will still have stable tenants. As for the type of boarding houses and rooms in the central area, the rental demand is always very high for both office workers, young workers and students.

In suburban areas, rental rooms near industrial parks will still be well-rented thanks to the return of workers after the Tet holiday. Meanwhile, rental areas near universities will still be a popular destination for students.

Ms. Trinh Thi Kim Lien, Sales Director of Dat Xanh Services, said that in 2023, there will be a shift in consumer behavior, from buying to renting in the context of an unrecovered economy, scarce housing supply, and high prices. This shift increases the demand for rental housing.

However, there is still differentiation in rental housing types. Low-end housing and worker housing are quite vacant and difficult to rent, while mid-range and above rental apartments maintain a good absorption rate. "The closer the housing is to the center, office areas, schools, supermarkets, the more attention it receives and the higher the rental price," Ms. Lien commented.

Will the cost of making a red book change when the 2024 Land Law comes into effect?

The 2024 Land Law has just been passed with a series of new regulations on land price tables and land price calculation methods... As a result, the costs related to the issuance of Land Use Rights Certificates (also known as red books) will have many changes.

According to Clause 1, Article 257 of the 2024 Land Law, the current land price list is being applied for the period 2020-2024 and will continue to be applied until December 31, 2025.

From January 1, 2026, provinces and centrally-run cities will issue and apply the new Land Price List.

After that, the Land Price List will be adjusted, revised and supplemented annually (updating land prices to match the market for areas and types of land with fluctuations) instead of every 5 years as at present to match market principles. The new Land Price List is built according to areas and locations on the basis that land valuation must ensure market principles.

In addition, Clause 2, Article 257 of the 2024 Land Law clearly states that a land price list will be developed for each plot of land based on the value area and standard plot of land for areas with cadastral maps and land price database.

Meanwhile, according to current regulations, the land price list is issued every 5 years, based on principles, methods of land valuation and land price framework. The land price list is only adjusted when the Government adjusts the land price framework/common land prices on the market fluctuate.

However, the revised Land Law has removed the land price framework. The new land price list is built based on the principles and methods of land valuation, not based on the minimum and maximum land prices of each type of land in the current land price framework, which means that the new land price list will be closer to the market land price, so it can increase sharply compared to the current land price list.

Land prices are determined based on the following factors: Land use purpose; Land use term. For agricultural land that has been allocated by the State to households and individuals according to the agricultural land allocation quota, agricultural land within the land transfer quota is not based on the land use term;

Input information to determine land prices according to land valuation methods includes: Land prices recorded in the national land database, national price database; Land prices recorded in land use rights transfer contracts; winning price of land use rights auction after completing financial obligations;

Land prices collected through investigation and survey in cases where there is no land price information specified in Point a and Point b of this Clause; Information on revenue, expenses, and income from land use.

There are also other factors affecting land prices; Relevant legal regulations at the time of valuation.

Meanwhile, the fees to be paid when registering for the first 'red book' include fees calculated based on the land price on the land price list such as land use fee; Land rent (if any); Registration fee, so when applying the new land price list from January 1, 2026, these costs may increase accordingly.

Source: https://baoquocte.vn/bat-dong-san-moi-nhat-nha-cho-thue-e-am-thoi-diem-vang-chot-xuong-tien-co-nen-mua-chung-cu-de-luot-258852.html