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

Positive growth potential for mid- and high-end apartment segment

At the Annual Seminar and Announcement of the Report "Forecasting trends in the mid- and high-end apartment segment in Hanoi in 2023" held on the morning of April 12, the Report of the Vietnam Real Estate Research Institute (VIRES) pointed out 4 bases for long-term, positive growth of the mid- and high-end apartment segment, emphasizing that when the legal environment is increasingly improved; Vietnam's economy is forecast to continue to recover and grow well; people's income increases; rapid growth in the number of rich people and the middle class; strong urbanization and infrastructure development... will be the driving force to promote the real estate industry, including the mid- and high-end apartment segment to develop in the medium and long term, especially in large cities like Hanoi.

Dr. Vu Tien Loc, National Assembly Delegate, Member of the National Assembly's Economic Committee, Chairman of the Vietnam International Arbitration Center, assessed that the rich and middle class in Vietnam are growing rapidly, and upgrading housing quality is a real and growing need of this class. "In the medium term, due to the lack of new projects, there will gradually be a shortage of mid- and high-end apartments, creating a gap in the supply-demand balance, in which demand increases while supply decreases. How long this period lasts and how big or small the gap is depends on the policy adjustments of the Government and the implementation organization of local authorities. However, reality shows that policy responses often lag, even quite a lot, compared to social and market developments" - Dr. Vu Tien Loc analyzed.

Looking from international experience on the growth prospects of the mid- and high-end apartment segment, Mr. Eric Park, Chairman of the Korea Real Estate Service Development Association, Professor of Real Estate Department - Soongsil University of Electronics, said that Koreans prefer to live in apartments, so the apartment market here is very developed with diverse products, not only the affordable and mid-range segments but also high-end apartments are also focused on development. "For Vietnamese real estate, international investors all assess this as a very potential market, developing and attracting more investors, always in the top priority investment market group of Korea, especially in large urban centers such as Hanoi and Ho Chi Minh City. However, investors need to conduct careful research and legal assessment before investing in high-end apartments" - Mr. Eric Park commented.

From a legal perspective, Associate Professor, Dr. Nguyen Quang Tuyen, Vice Chairman of the University Council, Head of the Faculty of Economic Law, Hanoi Law University, said that Hanoi's land fund is increasingly scarce. Therefore, the screening and selection of real estate projects will be more intense and strict. Real estate projects in general and projects in the mid- to high-end real estate segment in particular with full legal status will demonstrate their superiority in easy access to land for implementation.

Apartment selection trends of middle-class families in Hanoi

Dr. Vo Tri Thanh, Director of the Institute for Brand Strategy and Competition, commented that many new trends in urbanization show the prospects of the mid- and high-end apartment market in Hanoi. The driving force is created by changes in social structure and psychology, impacts from new living cultures or by the constant changes in supply and demand in the market. Specifically: The trend of choosing new urban areas to be closer to nature; the trend of the young middle class choosing mid- and high-end apartments in new urban areas around the inner city; the trend of renting houses by foreign experts coming to Vietnam to invest and work; the trend of investing in mid- and high-end apartments for rent.

VIRES's report has made specific recommendations for investors in the above context. Accordingly, in the mid- and high-end apartment segment, many projects and areas have not decreased in price even during the most sluggish period. When positive signals return, especially credit policies (interest rates decrease), apartment prices are expected to gradually increase. Therefore, this is a quite attractive time to buy mid- and high-end apartments in projects that meet the above criteria.

Experts attending the Seminar also pointed out that Hanoi is developing strongly to the East and West; especially after the completion of Ring Road 2 and a series of other infrastructure projects, it will help connect the core urban area with neighboring areas and regions conveniently. At that time, the demand for medium and high-end living space in new urban areas, in a complete, convenient, high-quality ecosystem in the East and West regions will increase; this is the potential for developing the ecosystem, with the medium and high-end real estate segment in these areas.

Giving recommendations to customers and investors in the mid- and high-end apartment segment in the current context, Professor Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, noted 3 things:

First, choose a location that suits the needs and traffic connectivity of your family and yourself, so that it is suitable for the work of adults and the school of children.

Second, the ability to provide services and utilities of the apartment complex, especially the education system, health care, and cultural institutions. Living conditions and requirements now are not only about construction quality but also about creating living space.

Third, this is a good time to buy houses in some good projects, because in the context of a shortage of supply, housing demand is still increasing. When there is a situation where many projects are not implemented, it is difficult to get more approved... then house prices are very difficult to decrease, especially in areas with good living conditions and infrastructure. The current market trend is still to maintain prices in places with signs and conditions of a good life./.

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