Growth opportunities for the mid-range and high-end apartment segment.

Positive growth potential for the mid-range and high-end apartment segment.

At the annual seminar and report launch of "Forecast of Trends in the Mid- and High-End Apartment Segment in Hanoi in 2023" held on the morning of April 12th, the report by the Vietnam Institute of Real Estate Research (VIRES) pointed out four positive long-term growth factors for the mid- and high-end apartment segment. It emphasized that the increasingly完善 legal environment; the projected continued recovery and growth of the Vietnamese economy ; rising incomes; the rapid development of the wealthy and middle class; and strong urbanization and infrastructure development will be the driving forces behind the real estate sector, including the mid- and high-end apartment segment, in the medium and long term, especially in large cities like Hanoi.

Dr. Vu Tien Loc, Member of Parliament , Member of the National Assembly's Economic Committee, and Chairman of the Vietnam International Arbitration Center, assessed that the wealthy and middle classes in Vietnam are growing rapidly, and upgrading housing quality is a real and increasing need for this class. “In the medium term, due to the lack of new projects, there will gradually be a shortage of mid-to-high-end apartments, creating a supply-demand imbalance where demand increases while supply decreases. How long this phase lasts and the extent of the imbalance will depend on the government's policy adjustments and the implementation by local authorities. However, reality shows that policy responses often lag behind, sometimes significantly, social and market developments,” Dr. Vu Tien Loc analyzed.

Looking at international experience regarding the growth prospects of the mid- and high-end apartment segment, Eric Park, Chairman of the Korea Real Estate Service Development Association and Professor of Real Estate at Soongsil University of Electronics, stated that Koreans prefer living in apartments, resulting in a highly developed apartment market with diverse products, not only in the affordable and mid-range segments but also in the high-end apartment segment. “For Vietnamese real estate, international investors consider it a very promising market, developing rapidly and attracting more investors. It consistently ranks among Korea’s top investment priority markets, especially in major urban centers like Hanoi and Ho Chi Minh City. However, investors need to conduct thorough research and legal due diligence before investing in high-end apartments,” Eric Park commented.

From a legal perspective, Associate Professor Dr. Nguyen Quang Tuyen, Vice Chairman of the University Council and Head of the Faculty of Economic Law at Hanoi Law University, believes that land in Hanoi is becoming increasingly scarce. Therefore, the screening and selection of real estate projects will become more rigorous and strict. Real estate projects in general, and those in the mid-to-high-end segment in particular, that have complete legal documentation will demonstrate superior advantages and easier access to land for implementation.

Apartment selection trends among middle-class families in Hanoi.

Dr. Vo Tri Thanh, Director of the Institute for Brand and Competition Strategy Research, noted that many new trends in urbanization indicate promising prospects for the mid-to-high-end apartment market in Hanoi. These trends are driven by changes in social structure and psychology, the impact of new living cultures, and the constant shifts in supply and demand. Specifically: the trend of choosing new urban areas closer to nature; the trend of young middle-class people choosing mid-to-high-end apartments in new urban areas surrounding the inner city; the trend of foreign experts investing and working in Vietnam renting apartments; and the trend of investing in mid-to-high-end apartments for rental purposes.

The VIRES report offered specific recommendations for investors in this context. Accordingly, in the mid- and high-end apartment segment, many projects and areas did not experience price decreases even during the most sluggish periods. When positive signals return, especially regarding credit policies (reduced interest rates), apartment prices are expected to gradually increase. Therefore, this is a rather attractive time to buy mid- and high-end apartments in projects that meet these criteria.

Experts attending the seminar also pointed out that Hanoi is developing strongly towards the East and West; especially after the completion of Ring Road 2 and a series of other infrastructure projects, which will help connect the core urban area with surrounding areas and regions. At that time, the demand for mid- and high-end living spaces in new urban areas, within a complete, convenient, and high-quality ecosystem in the East and West, will increasingly grow; this represents potential for the development of the mid- and high-end real estate segment in these areas.

Offering recommendations to customers and investors in the mid-to-high-end apartment segment in the current context, Professor Dr. Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, noted three points:

First, choose a location that suits your family's needs and transportation connections, making it convenient for adults' work and children's schooling.

Secondly, the availability of services and amenities within the apartment complex, especially in the areas of education, healthcare, and cultural institutions, is crucial. Modern living conditions and requirements now prioritize not only construction quality but also the creation of a comfortable living space.

Thirdly, this is a good time to buy a home in some good projects, because despite the supply shortage, demand for housing continues to increase. With many projects stalled or facing difficulties in obtaining further approvals, house prices are unlikely to fall, especially in areas with good living conditions and infrastructure. The current market trend is to maintain prices in areas that demonstrate a good quality of life.

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