Examining the 'health' of real estate segments in 2024

Apartment is the bright spot

According to a report by PropertyGuru Vietnam, in the long period from 2015 to 2023, the apartment price increase index in Hanoi and Ho Chi Minh City was 82% and 56% respectively. According to calculations by Savills Vietnam, the growth rate of apartment prices from 2019 to the first half of 2023 was 13%/year.

Although apartment prices have increased over the years, according to many experts, in 2024, this segment will continue to "heat up".

Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors (VARS), said that although the price of inner-city apartments is already high, the upward trend continues because of high demand while supply is limited. In addition, the increase in input costs from materials, labor, land prices, etc. has had a cumulative impact on apartment prices.

The apartment segment is expected to continue to increase in price. (Illustration: Cong Hieu).

" The housing demand of people in big cities is still very high, while the preparation for real estate project investment is prolonged, making it impossible to meet the supply immediately. Many projects are also stalled due to legal problems, so apartment prices can only remain high or continue to increase, " said Mr. Dinh.

Sharing the same view, Professor Dang Hung Vo also commented that apartment prices in 2024 will continue to increase. Explaining this, Mr. Vo said that the story of increasing house prices despite the sluggish real estate market is not surprising when the prices of raw materials and labor are increasing steadily every year, so the cost of building a house will certainly increase accordingly.

Not to mention, a group of speculators, buying and reselling in the secondary market, has caused the price of houses to reach end users to be inflated many times.

Alley real estate maintains price increase

One of the segments that is expected to increase strongly in price again in 2024 is houses and land in alleys.

Actual records show that the real estate market in alleys in Hanoi is bustling again as the number of transactions has increased dramatically. Prices have also increased compared to a year ago.

Regarding the attractiveness of landed real estate, a leader of Savills said that in recent years, although the market has fluctuated a lot, the profit margin of landed real estate has had a high price increase, fluctuating between 20-25% per year. In some projects, the secondary market price has even increased by 40-50% per year.

He also assessed that landed real estate is still an effective investment channel and a safe haven in the context of inflation continuing to increase in the coming time. This product line is suitable for investors with stable financial flows, who can invest in the medium and long term.

Mr. Tran Minh, Chairman of the VSC Real Estate Brokerage Club, said that the price of houses in alleys in Hanoi has increased again due to the high demand for real housing. After mid-2023, the price of houses in alleys increased by an average of 200-300 million VND. This type of house is forecast to continue to increase slightly by 10-15% in 2024.

Sharing the same view, according to Mr. Cao Minh Thanh, General Director of Milanpro, the real estate market in big cities like Hanoi is showing many positive signs and in 2024, these positive signs will be even clearer, which also means that real estate prices will increase again.

Industrial real estate attracts investment capital

Despite being significantly affected by the economic recession and political turmoil in the world, industrial zones continue to stabilize and develop.

According to the Vietnam Association of Realtors (VARS), industrial real estate rental prices will increase by about 20% in 2023, with the Northern region witnessing the strongest price increase. The average rental price in this region is 135 USD/m2/rental cycle, an increase of 33% compared to 2022. In the South, the average rental price is 188 USD/m2/rental cycle, an increase of 15% compared to 2022.

According to Ms. Pham Thi Mien - Deputy Head of Market Research and Investment Promotion Consulting Department, VARS, in 2024, industrial real estate is still considered a good growth segment.

Many new industrial park investment projects have been approved in principle and are starting to implement the next phases. The supply of industrial park real estate is witnessing growth in both the North and the South. The demand for industrial real estate is still very large…

In addition, the planning of many provinces and cities for the period 2021 - 2030 has been approved, which will partly resolve the problems related to legal procedures for industrial parks. These factors will help industrial park real estate in 2024 continue to maintain its position and grow.

Land should only be invested in long term.

Prices of many real estate segments are forecast to increase in 2024. (Illustration photo: Ngo Tran)

According to a report by PropertyGuru Vietnam, in the last months of 2023, the liquidity of the secondary land market has shown signs of a slight increase again, with investors starting to invest in projects with high discounts, full legal documents, locations near crowded existing residential areas, and convenient transportation connecting to the central area.

Buyers and investors are more demanding in terms of quality and legality of projects. They tend to use more data to make decisions. That is data with many years of history on price fluctuations, investment returns and supply - demand.

Although land is still one of the promising types attracting people's attention, in reality, in the short term, when the Law on Real Estate Business (amended) and the Law on Housing (amended) come into effect, it will bring more difficult impacts to the land market from 2024.

Specifically, with the current tightening regulations on land subdivision, it is forecasted that the demand for land will decrease sharply due to buyers' concerns about legal risks. At the same time, the land price level will also be adjusted down, especially for large plots of land.

According to Mr. Dinh Minh Tuan, Director of PropertyGuru Vietnam in the Southern region: " In the long term, land prices may continue to increase because real estate prices depend on other factors such as infrastructure development, economic growth, and people's income ."

Real estate expert Tran Khanh Quang predicts that it will take at least the second quarter of 2024 for land demand to recover. However, this segment will not be as hot as before. Transactions will mainly only appear in certain areas and have not spread widely. It will not be until 2025 onwards that the land market will enter a price increase cycle.

Chau Anh

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