Apartment investors in 2023 still have quite good profits

According to Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam, total return is the sum of capital growth and rental yield. For example, the apartment market in Ho Chi Minh City in 2023 brought a total return of 2.9% to 13.6%. This is a fairly smooth performance in a difficult period of the market. Importantly, real estate is a long-term investment channel and should be measured over a long-term stable period of at least 5 to 10 years.

Other asset classes have also performed similarly subdued, reflecting a weakening global economy and subdued domestic demand. Over the longer term, Vietnam’s fundamentals such as growing middle-income incomes, a large population and urbanisation will be key drivers for residential real estate.

“Vietnam has one of the highest levels of infrastructure spending in the region (6% of GDP), which will change the way real estate is used, so investors should keep a close eye on these important impacts,” said Troy Griffiths.

Apartment investors still have good profit margins in 2023, picture 1 — Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam.

Also according to Savills' previous report, in the third quarter of 2023, the average primary price of apartments reached VND54 million/m2, increasing for 19 consecutive quarters and increasing by more than 77% compared to the first quarter of 2019. In other words, the price of an apartment at the present time is almost twice as expensive as at the beginning of 2019.

In addition, apartment prices are forecast to continue to increase in 2024, especially the "reversal" time is expected to fall in the second quarter. In fact, many investors have prepared to launch products during this period with a lot of information about the project being revealed. Notably, the leaked prices of new projects are all at extremely high levels, focusing on the mid-range and high-end segments.

The leak of new high-priced products also partly affects the prices of old projects. Thereby, the market is expected to have a slight price increase in the short term, significantly affecting market liquidity in the new year.

However, many experts believe that although the average price of apartments has not decreased, people's ability to buy houses has increased thanks to flexible incentive policies from investors. In particular, the policy race has not shown any signs of cooling down as more and more "huge" incentives are being launched, most of which focus on relieving financial pressure for customers with preferential interest rates.

Apartment investors still have good profit margins in 2023, picture 2 — The real estate market promises a strong "reversal" in 2024.

Some policies include 30% down payment to receive the house on the day; 30% down payment and 70% interest-free loan until house handover; Principal grace period up to 24 months; Interest rate support for a period of 2 - 5 years; One-time payment discount up to 30% or gift programs such as gold or cars.

Regarding this issue, Mr. Dinh Minh Tuan, Sales Director of the Southern region of Batdongsan.com.vn said that the flexibility of investors is also shown in the fact that instead of designing large apartments, investors now tend to design apartments with small areas, to suit people's budgets.

"If housing prices do not decrease, reducing housing area is also a way to help people increase their accessibility and be able to own an apartment. I think this is and will be a prominent trend of the apartment market in the coming period, especially in the Ho Chi Minh City area."

Mr. Tuan shared and added that in the Hanoi area, investors will likely tend to move out of the inner city towards the suburbs to develop projects. This will help investors have more abundant land funds and help home buyers reduce the price burden.

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