Which real estate segment will recover the fastest?

Specifically, Mr. Nguyen Quoc Anh - Deputy General Director and Sales Director said that, with the land type, despite a sharp decline, this is still a segment that attracts great attention in the Vietnamese real estate market, accounting for 28% of the purchase choice of customers participating in a survey by Batdongsan.com.vn.

Of which, 46% of investors choose to spend money to buy land, 32% of customers who want to expand their living space also choose to buy land.

In terms of price fluctuations, land prices have been growing continuously since 2018. Accordingly, land prices nationwide in the third quarter of 2023 increased by 38% compared to the same period in 2018, the Southern market had the strongest increase in land prices in the country, nearly 71%, while the Northern provinces recorded an increase of about 51% in the past 6 years.

The apartment segment is expected to recover the soonest.

Assessing the recovery prospects of the land market, according to a survey conducted on 1,000 real estate brokers, 25% of brokers believe that the land market will not recover until the fourth quarter of 2024, about 17% believe that it will recover in the third quarter of 2024 and 22.6% believe that the reversal point will be the second quarter of 2024.

Regarding this issue, Mr. Quoc Anh said that compared to other types, the recovery time of the land market may be slower due to many factors.

In terms of economic growth, it is forecasted that the economy will not recover until 2024. Open credit for real estate investment remains very low, and interest rates are gradually decreasing, but at the current rate of decrease, it is expected to take 3-4 quarters to return to the 2021 interest rate.

In addition, the speed of public investment disbursement is expected to explode only in 2025, and the land law is also expected to be passed by the end of 2024 and will take some time to come into effect.

In addition, market sentiment is still low with real estate segments belonging to the investment and speculative categories, which rarely serve real housing needs.

Therefore, Mr. Quoc Anh predicts that land will recover more slowly than other types and it may not be until the end of 2024 that this market will reverse.

Regarding low-rise real estate, Mr. Le Bao Long - Strategy Director of Batdongsan.com.vn said that currently, among low-rise housing types, single-family homes are the products with improved transactions, while townhouses and adjacent villas are still sluggish. Business and retail activities have not been able to recover due to the difficult economic situation and unprosperous tourism.

Therefore, the recovery time of low-rise housing compared to land plots is likely to be better but there is regional differentiation.

Specifically, in Hanoi, the suburban urban areas in the North and East are expected to be the two most potential areas. As for Ho Chi Minh City, the East is also the area that is considered to have the best potential.

The pressure of post-pandemic recovery and economic recession makes it difficult for commercial and service development activities in Vietnam. Rental yields are still gradually recovering to pre-pandemic levels, and connecting infrastructure projects are gradually taking shape, so it is forecasted that the low-rise housing market may recover in the late third quarter and fourth quarter of 2024.

Regarding the apartment type, according to a previous survey, about 27% of brokers believe that apartments will recover in the fourth quarter of 2023; 42% believe that this type will recover in the first 6 months of 2024.

In general, this is the type that is predicted to lead the recovery trend of real estate. Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the South, said that the apartment market is likely to recover the earliest compared to other types, expected to fall in the first quarter of 2024 and at the latest in the second quarter of 2024 will reverse.

Chau Anh

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