After apartments, which type of real estate will lead cash flow in the coming period?

Condominiums are still leading the market

Along with the stability of economic growth, the real estate market in the second quarter of 2024 continued to record positive signals with new supply and transaction volume increasing sharply, 3 times and 2.4 times respectively compared to the previous quarter.

Specifically, research data from the Vietnam Association of Realtors (VARS) shows that in the last quarter, the primary housing supply reached about 27,335 products, with about 19,747 new products offered. In the whole market, there were 14,400 successful transactions recorded. The transaction volume increased sharply due to improved supply quality and demand, focusing mainly on apartment projects. Market demand, including investment demand, increased by about 30% compared to the previous quarter, and real demand, both improved as confidence in the market gradually recovered.

VARS also stated that, up to now, apartments are still the main segment leading market liquidity. Of which, more than 70% of supply and 75% of transactions in the primary real estate market in the second quarter of 2024 are contributed by the apartment segment. Newly opened apartment projects, with the segment being projects with prices above 50 million VND/m2, concentrated in Hanoi, all recorded very good absorption rates, up to 90% after a short time of official opening, although primary prices continued to increase.

The apartment price index continues to maintain an upward trend with the highest growth rate in Hanoi. Since mid-late 2023, the growth rate in selling prices of the Hanoi apartment market has begun to increase and surpass the price increase of the Ho Chi Minh City market. As of the second quarter of 2024, the average selling price of primary apartments in Hanoi is close to 60 million VND/m2. Compared to 2019, the selling price of primary apartments in Hanoi recorded an increase of over 58%, more than double the increase rate (27%) of the Ho Chi Minh City market.

In addition, the apartment price index in Da Nang has also started to increase again, with the price increase rate in the second quarter of 2024 surpassing that of Ho Chi Minh City. However, the average apartment price here is still lower than the two special cities.

VARS believes that primary apartment prices will still be difficult to decrease, especially when the supply of high-end apartments is overwhelming. Along with that, construction costs are increasing and with increasingly high-quality investment in space and utilities. Land funds for commercial housing development in the center and the suburbs will continue to be developed by investors in the apartment segment, serving the investment needs and real housing needs of "the rich". As for home ownership, low- and middle-income individuals will continue to rely on social housing. But this segment will not be available much within a radius of less than 30km from the central area.

However, according to this unit, in the context of the real estate market not fully recovered, the supply is still scarce, the apartment segment will continue to be an attractive, low-risk choice for investors. Because the fluctuations of the previous solution are expensive lessons for new investors, as well as "veteran" investors who set stricter requirements in buying houses for investment, especially when using financial leverage.

Cash flow is likely to change direction.

According to VARS, based on careful consideration of micro factors, cash flow will gradually "turn" to other types, with factors such as location, development potential and clean legal status.

Location is the most important factor in real estate investment, determining the value and potential price increase of the product. These are products located in the center, in localities with good economic growth, development associated with industry, trade, and services; have a convenient transportation system, close to amenities such as schools, hospitals, shopping centers, and entertainment areas.

In addition, real estate in areas with effective development and planning, attractive investment attraction policies, and boldly offering synchronous traffic will have clear potential for price increase. However, it is necessary to carefully study the development plan of that area in the future.

Finally, real estate products with red books/pink books or legal land use right certificates are also important factors. Or the product is developed by reputable investors, has a synchronous and modern infrastructure and utility system, or products with high-class service ecosystem, aiming at elite residential communities.

Investment cash flow into real estate is forecasted to have the potential to change direction.

VARS believes that the real estate market will certainly need time to fully "absorb" the content of the new Laws. Along with that, real estate projects need time to resolve obstacles because the Law took effect 5 months earlier than the previous decision and to complete procedures, start and re-implement before bringing new supply to the market. Therefore, in addition to the apartment segment, in the short term, cash flow will gradually shift to products that are "ready" to trade and possess outstanding factors.

First, we can mention low-rise products of reputable investors, with handover conditions or have been handed over, with strength in the secondary market. Next, we cannot fail to mention the type of land - "the king of investment channels" with attractive profits. The plots of land that have been divided into plots, in developed areas associated with industry, trade and services, with complete infrastructure, and prices that are not too high will continue to be sought after by investors.

The most attractive type of land is auctioned in urban and residential areas because this type is clean, not involved in disputes, lawsuits, not encroached upon and not for rent, especially with red books and available infrastructure. Investors can easily build houses on these plots of land for rent, earning monthly cash flow.

In fact, recently, the organization of land auctions in urban areas and new residential areas has been implemented by localities more than in the same period. Land auction activities in some aspects have been bustling with the number of applications skyrocketing, with successful prices from 20% to 10 times higher than the starting price.

In the coming time, money will certainly continue to "pour" into auction land when methods of organizing many auctions bring in budget revenue.

"Proper investment not only helps investors keep assets, generate profits, and create added value for society, but also helps the real estate market develop more healthily and effectively in the long term, instead of land products and many types of prices," VARS commented.

Source: https://www.congluan.vn/sau-can-ho-chung-cu-loai-hinh-bat-dong-san-nao-se-dan-dat-dong-tien-trong-giai-doan-toi-post304256.html