Positive signals after 1 year of Da Nang real estate 'submerging'

Da Nang real estate "submerged" in 2023

Mr. Tran Trong Vu, member of the Real Estate Market Research Working Group, Vietnam Association of Realtors (VARs) in Da Nang, said that unlike other localities, Da Nang real estate "peaked" in early 2019, then declined sharply due to fluctuations caused by the COVID-19 pandemic. By 2022, the whole country was "feverish" in land and Da Nang was no exception and quickly "peaked" the wave, but real estate prices have not fully recovered.

After a year of "hot" growth, in 2023, the Da Nang real estate market suddenly "submerged" and experienced difficulties. However, there were some positive signals, that is, in the final period of the year, the real estate market recorded more positive signals than at the beginning of the year.

Positive signals after 1 year of Da Nang real estate flooding image 1 — In 2023, the Da Nang real estate market suddenly "submerged" and experienced difficulties. (Photo: PO)

Among them, the products that are being absorbed the most by the market with a sharp increase in searches are land and some low-cost apartment projects in some areas of Nam Hoa Xuan, with a slight increase of 5% - 10% compared to the beginning of the year.

"A notable point this year is that real estate products that generate cash flow are sought after by many investors. Most products that generate cash flow of over 4%/year compared to the cost price are successfully traded," Mr. Vu assessed.

Next, compared to other centrally-run cities, Da Nang real estate prices are still quite cheap, so the investment yield to create cash flow in this locality is quite high, the efficiency of exploiting product lines such as apartment buildings, tourist villas... reaches an average rate of 3-5%/year.

Citing survey information, Mr. Vu said that in 2023, the Da Nang real estate market will flourish with two very sustainable types of real estate: urban tourist villas concentrated in the coastal areas of Son Tra, An Thuong, Nam Viet A, Son Thuy and apartment buildings... The capital allocated for the type of tourist villa is on average from 14 - 20 billion/unit and can create a cash flow of 50 - 80 million VND/month.

“The average rental price for apartment buildings is 3.5 - 4 million VND/month for a studio apartment and the average price for a 1-bedroom apartment is 4.5 - 5.5 million VND/month. This type of apartment is developing strongly and evenly in central and sub-central areas,” Mr. Tran Trong Vu added.

Developing real demand, supporting market liquidity

Assessing the potential of Da Nang real estate in 2024, Mr. Vu commented that the market will have a large supply of apartments in the near future when real estate investors are completing legal procedures and gradually opening for sale from the third quarter of 2024.

In particular, Da Nang is currently the leading locality in the country in terms of the supply of social housing at affordable prices with more than 15,000 units. In the first week of 2024, the locality also publicly announced the sale of the first batch of social housing. However, in reality, it still does not fully meet the needs of the people.

Explaining this issue, Mr. Vu informed that on the one hand, social housing in Da Nang is currently mainly concentrated in the Lien Chieu area, while in the South and Southwest of the city there are almost no new projects.

On the other hand, the current population growth rate in Da Nang is 2.51%/year, so the current supply of social housing is large but not enough to meet the demand. The clearest evidence is that in 2023, there were nearly 15 sales with 1,700 social housing apartments for sale and all sold out quickly.

VARs experts believe that the world economy is still very difficult and will have a big impact on the Vietnamese real estate market. Investors when launching products in 2024 need to meet 3 criteria.

"The selling price is reasonable for the market, ensuring average payment progress of 24 - 36 months; having credit support policies and high discounts will be welcomed by the market," said Mr. Vu.

Source