Which real estate segment has a profit margin that surpasses other channels?

In 2018, Ms. Thu An bought an apartment worth about 2 billion VND for her son who had just enrolled in Da Nang University of Technology. The apartment she bought was in a project near the sea, located on Vo Nguyen Giap Street, Da Nang City. 5 years after her son graduated, she sold the apartment for 2.8 billion VND.

She used this money to buy an apartment in a large urban area in Hanoi for her second child to go to university. She said that for the past few months, this apartment has been inquired about for a price difference of about 150-200 million VND, despite the difficult real estate market.

A recent third quarter market report by a research unit shows that apartments are the type of real estate least affected by negative market impacts over the past year because this type serves real housing needs.

Last quarter, the interest in apartments showed signs of recovery, with demand for buying apartments increasing by 1% and for renting apartments increasing by 6% compared to the previous quarter. Of which, apartments priced from 2-4 billion VND were the most searched.

Phân khúc bất động sản nào có tỷ suất lợi nhuận ăn đứt các kênh khác? - 1 — This real estate segment has a profit margin of up to 12.5%/year, much higher than other investment channels (Illustration: Ha Phong).

In 2023, apartment prices did not change much, only increasing slightly by 1-5% in Hanoi and almost unchanged in Ho Chi Minh City. However, in the long term from 2015 to present, the apartment price increase index in these two localities has exceeded the growth rate of people's income.

After 8 years, apartment prices in Ho Chi Minh City and Hanoi increased by 82% and 56% respectively, while income of people in urban areas increased by only 39%.

A report at the end of August by a securities company in Hanoi also said that primary prices of high-end and luxury apartments in Ho Chi Minh City cooled down in the first half.

The average primary price of apartments in Ho Chi Minh City recorded the first decrease since 2018 (down 4.8% year-on-year) in the second quarter. The high-end and luxury segments decreased by 4-6% year-on-year while other segments recorded an increase of 2-4%.

Housing prices in Hanoi cooled down across the board while the mid-range segment maintained its upward momentum in the second quarter. Primary apartment prices in Hanoi remained unchanged from the previous quarter in all segments, except the mid-range segment (up 10% quarter-on-quarter and up 15% year-on-year).

Data from 2015-2023 of this research unit, the average profit rate when investing in apartments is up to 12.5%/year (combining price increase and rental profit). This is a better and more stable profit rate than other types of investment such as stocks, gold, foreign currency, land, savings.

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