What to note when investing in apartments

Investor reputation, selling price and use of financial leverage are the three main considerations that real estate investment consultants give to investors in the apartment segment.

Apartments in Hanoi are being sought after by many investors in Ho Chi Minh City. Photo: Duc Thanh

Cash flow from Ho Chi Minh City to Hanoi

Recently, we have witnessed many investors from the South “swimming upstream” to the Hanoi market. They are interested in and researching projects in the high-end apartment segment.

OneHousing's data shows that the number of people looking for real estate in Hanoi from Ho Chi Minh City has increased 7.5 times compared to before.

According to Mr. Tran Quang Trung, Business Development Director of OneHousing, up to this point, whether it is primary or secondary products, the price level in Hanoi is still cheaper than in Ho Chi Minh City. Specifically, with the apartment market, in the same segment, in Hanoi, the difference is about 30% compared to Ho Chi Minh City, with some product lines up to 40%.

The Ministry of Construction 's report on the real estate market in the first quarter of 2024 shows that the apartment market continues to attract the attention of groups with real housing needs and medium and long-term investors. In particular, the average selling price of some projects in Hanoi and Ho Chi Minh City fluctuates between 50 and 70 million VND/m2.

Experts recommend that investors should consider carefully when choosing a loan limit. No bank or investor can accompany customers with a commitment of up to 15-20 years, so a loan of about 50% of the product value is appropriate, and larger, from 70% or more, is high risk.

In Hanoi, apartment prices for sale have been continuously increasing in both the primary and secondary markets. In April 2024, the affordable apartment segment (under VND 30 million/m2) increased by 12% compared to the previous month. Mid-range apartments (VND 30-50 million/m2) also increased by 5%, luxury apartments (over VND 50 million/m2) increased by 3%.

OneHousing representative said that investors from Ho Chi Minh City to Hanoi and some large provinces and cities in the North have two main tastes.

Firstly, find apartments in low-rise projects, existing projects of reputable investors, they see this as the time to put money down. The characteristic of this group of investors is that they do not consider long-term investment, their investment period is only about 2 years.

Second, in the apartment segment, investors in Ho Chi Minh City prioritize choosing projects from investors with reputable brands, especially those whose products have helped them generate profits and have good liquidity in the Ho Chi Minh City market.

At Vinhomes Ocean Park and Vinhomes Smart City, the investor Masterise Homes always accounts for a large proportion and increases steadily every year, expected to reach more than 40% in the period of 2024 - 2026. This will be an abundant supply for investors who are looking to invest in the high-end apartment segment in Hanoi.

Currently, the biggest pressure for investors is to keep cash. Gold prices are increasing, inflation is on the rise, making investors think that if they keep money, they are gradually losing their assets, so they tend to invest in real estate.

Ms. Cao Thi Thanh Huong, Senior Manager of Savills Ho Chi Minh City Research Department, commented that this is the right time to invest in apartments for rent, because in the next 3-5 years, the supply of apartments in Ho Chi Minh City and Hanoi will still be scarce due to the limited land fund for project development. Therefore, after a period of exploitation for rent, investors can sell to enjoy the price difference over time, while having additional cash flow from rent.

Many investors have seen the opportunity when overseas Vietnamese are allowed to buy houses and have full rights as Vietnamese citizens under the Land Law (amended). If investing at the present time, it can be liquid when receiving the large cash flow from overseas Vietnamese.

Be careful before putting down money

Savills experts believe that when deciding to invest in apartments for rent, investors prioritize apartments that have been handed over and have pink books to be able to borrow from banks. In the case of buying a new apartment, there are more calculations, it is possible that transferring a deposit to make a profit will be prioritized, then consider exploiting for rent, waiting for the price to increase.

People's access to apartments is becoming increasingly difficult, as income growth cannot keep up with housing price growth. In the future, primary apartment projects will have high prices because investors must optimize profits when input costs increase. This partly explains the trend of many young families renting houses today. However, for investors, buying a house to wait for price increase or exploiting for rent at this time also needs careful calculation.

According to Ms. Cao Thi Thanh Huong, at this time, the sales policies of investors are also "pleasing" to buyers. However, home buyers need to pay attention to the reputation of the investor.

“Providing many attractive policies, whether or not they can be implemented is another matter. There are many cases where, for many reasons, project investors have broken down halfway and cannot fulfill their commitments to home buyers,” Ms. Huong stated the reality.

In addition, investors need to carefully analyze the apartment selling price. During the sales process, the houses sold in the later stages are often priced higher than the previous sales. Therefore, investors also implement many incentives and more diverse payment methods. Buyers need to compare and check prices carefully to decide whether to buy products from the previous or next stage.

Buying products in the early stages will have better prices, but the payment period will be shorter, so you need to prepare financial resources in advance. In the later stages, although the price is higher, the payment schedule is longer, so the financial pressure will be reduced.

Finally, there is the use of financial leverage from banks to buy a house. According to Savills experts, normally, banks offer loan packages with preferential interest rates for a fixed period (2-3 years), after which the interest rate will float.

Therefore, investors must carefully consider their financial situation, avoid borrowing too much, leading to a large debt burden, because if they borrow and cannot repay, they will have to sell off and suffer losses.

Source: https://baodautu.vn/batdongsan/luu-y-gi-khi-xuong-tien-dau-tu-chung-cu-d215915.html