At the end of 2022, Tran Thanh Lan, a resident of Tan Binh district in Ho Chi Minh City, continued to search for a location to settle in, from the city suburbs to border region areas such as Long An or Binh Duong provinces.

After nearly a decade of employment in Ho Chi Minh City, Lan has accumulated a modest sum of savings. Now that his parents are older, he wanted to move them from his hometown to the city so they may join his small family.

Real estate investors ponder where to place their money

At the start of the year, he intended to purchase a 3-bedroom apartment in Picity High Park, a mid-range project in District 12 and prices ranging around $2,000 per square metre, depending on the location.

“A 80sq.m apartment would cost almost $170,000. Tenants are required to pay 30 per cent of the apartment’s worth in advance, around $50,000. I had planned to seek a bank loan to finance the remainder, but ended up choosing not to purchase it since the price was too high,” Lan explained.

He then looked into a number of alternatives but found none to be acceptable. When he returned to Picity High Park just a couple of months later, the cost of a residence had increased to more than $190,000. In addition, the process for requesting financial support from banks was more onerous than it was in the past.

Giving up his plan to purchase an apartment, Lan considered purchasing land in the Phuc Dat residential area project, located on Street DT743 in the city of Binh Duong. Here, a broker said that land prices in this area had also hit around $2,000 per sq.m.

Lan discovered that he could not afford to build a home if he spent around $127,000-170,000 acquiring land. Consequently, despite having a certain amount of money, his family has neither spotted a place to settle down nor determined where to invest in.

In another case, Ngoc Ha, an accountant in a logistics firm based in Thu Duc city, decided on some land in Dong Nai province. At the end of 2020, she borrowed additional funds from a bank to purchase a small piece of land in Nhon Trach district, which is 30km from the centre of Ho Chi Minh City. Within a year, she managed to sell the plot and earned a profit of almost $17,000.

Ha was motivated to make another move after her initial profitable transaction and taking advantage of decreasing land prices during the pandemic. However, shortly thereafter, property prices consistently hit a new price peak.

“At present, it is very difficult to make decisions with only $85,000 of capital. Over the past two years, housing prices have risen dramatically,” she shared.

Aside from the aforementioned circumstances, many investors are apprehensive about their choices owing to the ever-increasing prices of high-end projects, while mid-end ones are scarce or lack transparency. In addition, the restriction of bank financing has imposed additional burdens on both developers and purchasers.

According to Nguyen Duy Thanh, CEO of property management firm Global Home, purchasers with modest capital could acquire land directly from tenants in suburban regions rather than in developments owing to the possibility of a price increase in the future and the more affordable pricing.

“Real estate remains a safe option, but homebuyers should only borrow 30-50 per cent of the property’s worth from banks, as credit interest rates are now high,” Thanh said.

Luong Dinh Thuy Van, general director of real estate consultancy Mogin Holdings, stated that investors need to develop a risk tolerance threshold in order to determine the expected profit margin and type of real estate in which they wish to fund.

“At present, real estate funding needs safety but not surfing like before,” Van emphasised. “People should pour their money into projects that have been handed over and are backed by legal assurances.”

Pham Anh Khoi, general director of finance company FINA, stated, “The current environment is not conducive to short-term investments. Financiers need to develop a long-term mindset, focusing on the value and locations with high population density as well as complete infrastructure. They should also assess whether the property is suitable for rent or not.”

A seasoned investor residing in Thu Duc city Oanh Le has likewise prioritised safety until the end of 2023. “Investors seek products with high liquidity for rapid and easy transfer. Highly liquid property must have a clear legal status and can be used instantly.”