At the 2024 Vietnam Wealth Advisor Summit in Hanoi last week, CBRE Vietnam executive director Duong Thuy Dung said that although the real estate market had not recovered as expected, some segments were still on the priority list of investors.

“The market is currently extremely scarce in terms of residential units. In the past 10 years, on average, Ho Chi Minh City needed to have 30,000-40,000 apartments for sale each year, but in 2024 it is forecast that only about 8,000 apartments will be launched on the market,” Dung said.

In the first three months of the year, the total supply in Ho Chi Minh City was only just over 1,000 apartments for sale, with zero town-houses, villas, or land available. In Hanoi, there are more than 2,000 apartments and 2,000 villas for sale, a tiny number compared to before the pandemic.

“We can see that there are very few choices for investors and home buyers when they want to buy for investment or to live,” Dung said. “Meanwhile, demand is high from end-users and investors. When they have idle cash flow, Vietnamese people hope to buy real estate to invest in addition to other investment channels such as gold, deposits, bonds, and stocks,” Dung said.

The first three months of the year in Hanoi saw residential property price increased by an average of 17 per cent. The CBRE forecasts that the price increase in the second quarter will be 20 per cent, and then in 2025 and 2026 will level off at 5-6 per cent. In Ho Chi Minh City, the prices will increase from 2 to 4 per cent per year until 2026.

“With limited apartment supply, demand on the market is high due to natural population growth and mass migration to big cities. This is an opportunity for investors to buy for resale or rental,” Dung said.

Nguyen Minh Tuan, CEO of AFA Capital, said that residential property was on the recommended investment list of Vietnamese financial consultants.

“Three new laws will take effect this year that will help clear the legal system for projects, increasing supply for the mid-range and affordable apartment and town-house segments,” Tuan said.

He added that when supply increases after a long period of stagnation, the market would rebalance, bringing more opportunities for people to buy homes.

Financial answers for buyers

Nguyen Hoang Nam, general director of G Home, said that the financial solutions expected from the developers were an important key to helping people find a place to settle.

“Programmes to extend principal debt and delay payment schedules are providing home buyers with acceptable solutions,” Nam said.

According to Nam, to build houses for mid-income citizens, it is necessary to establish a system of satellite towns. “This has been seen in all major metropolises in the world and what we need is to have metro lines connecting to city centres, in addition to ring roads and core routes,” Nam said.

In fact, primary real estate prices currently remain increased, but in return, buyers enjoy many policies from investors to increase liquidity. Therefore, this is the best time for buyers to hunt for a residential unit with a good price.

In Binh Duong, The Standard project invested by An Gia Investment is offering a discount policy of up to 30 per cent if the buyer pays for 95 per cent of the product value in advance. A representative of An Gia said that the discount was the biggest incentive the company has ever offered for buyers of detached town-houses at The Standard.

“This policy is aimed at a group of customers who have spare cash and want to buy a house immediately to upgrade their living space. In terms of investment, buyers can also easily secure cash back,” a representative said.

In addition to this policy, An Gia has also launched extended payment policies and interest rate support for customers who need loans to buy houses. Specifically, buyers of The Standard detached town-houses only need to pay 10 per cent in advance to receive the house.

Meanwhile, Nam Long Group has completed and handed over its Flora Panorama apartments in Mizuki Park, and granted a high-end interior package valued at up to VND 500 million ($20,800) for buyers without loans from banks.

Buyers who have loans from banks can borrow up to 70 per cent of the apartment value. Lenders will not have to pay the principal in the first two years but a fixed interest rate of 2 per cent per year only. This instalment level is even lower than the monthly expense of renting an apartment.

According to Le Quoc Kien, an independent real estate investment consultant, the property market in the past two years has entered a purification phase, and is a playground for investors using their idle money.

“Currently, real estate products that target real usage needs have liquidity. At the same time, clear legality and immediate usability are given priority by buyers,” Kien said. “For example, town-houses and apartments can be lived in or rented immediately, the factory can be used as a place for production and business or for rent, or plots of land can be exploited for agricultural production and business.”

Presently, real estate products that target real usage needs and have immediate usability are given priority, photo Dung Minh

Reducing interest rates

According to the Vietnam Association of Realtors (VARS), the fact that banks have simultaneously reduced lending interest rates is considered a good opportunity for home buyers at this time, although many people are still concerned about the floating interest rate after incentives. However, compared to last year, the average floating mortgage rate is now around 9-11 per cent, having dropped from a peak of 15 per cent annually.

In addition, many banks have coordinated with investors to launch policies with a commitment to a maximum interest rate ceiling, so home buyers will avoid risks related to floating interest rates.

Currently, credit institutions mostly encourage home loans for residential purposes, which are low-risk loans with clear collateral terms. Loan interest rates remain stable, including home loan interest rates, with loan terms lasting 25-30 years, reducing the pressure of monthly repayments for borrowers.

After a long period of carefully observing the development of the market, buyers and investors have clearly begun to show their interest in buying products of the market, despite remaining cautious.

“Customers and investors are now becoming more hesitant, cautious, and calculating in depositing money. They are willing to spend time and money on legal checks and research, carefully evaluating prices and liquidity before deciding,” said Nguyen Van Dinh, deputy chairman of VARS.

Recent VARS surveys of real estate brokers show that, although they are more cautious in deciding to invest money, if the supply is reasonable, up to 70 per cent of customers and investors are willing to buy real estate in 2024.

Apartment rental prices are also increasing, and scarce rental supply is an advantage for renting apartments. Data from batdongsan.com.vn shows that the current apartment rental rate is still higher than the bank savings interest rate.

For example, an apartment worth nearly $166,000 in Ho Chi Minh City can be rented for $540-750 per month, depending on location.

“The rental apartment type still has good growth momentum with interest remaining high due the gross profit margin of up to about 12.5 per cent per year. When the ability of young families to buy a house continues to be limited, the rental housing segment is a good choice for investors,” said Nguyen Quoc Anh, deputy general director of batdongsan.com.vn.

“The profit margin from rental apartment investments in Ho Chi Minh City has increased. Although it has not returned to the level before the pandemic, it has been more positive than in 2022. This is a good period to buy an investment apartment for rent. In the next 3-5 years, the supply of apartments in Ho Chi Minh City will be scarce, due to depleted land availability and legal problems. The rate of return on apartments is still good.”