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The real estate market in Hanoi has been facing numerous challenges, but the prices of condominiums have been continuously rising, defying the overall market difficulties. This has led to lucrative opportunities for sellers, with some even doubling their initial investment.

Rising demand for Hanoi condominiums

Despite the tough market conditions, the demand for condominiums, especially for practical living spaces, has been steadily increasing. For instance, after saving up for some time, a couple named Lan (35 years old) managed to purchase a 64m2 condominium in Me Tri, Nam Tu Liem, Hanoi for 2.1 billion VND, equivalent to approximately 33 million VND per square meter.

Lan shared her surprise at the current asking price for her condominium. She revealed that some real estate agents have contacted her with offers ranging from 3 billion VND to 3.2 billion VND. However, Lan and her husband have no intention of selling the property because it is convenient for their children’s education.

Similarly, Quang’s family, also from Nam Tu Liem, Hanoi, sold their old condominium at a considerable profit. In 2016, due to financial constraints, they purchased a 65m2, 2-bedroom condominium in the HH Linh Dam Building (Hoang Mai) for 1 billion VND, which was approximately 15 million VND per square meter.

Quang said that after several years of saving, their financial situation improved, and they decided to buy another condominium in Nam Tu Liem District. They decided to sell their old condominium at the beginning of this year since they no longer needed it. To their surprise, within just two weeks of listing the property, they sold it for 2 billion VND, which was twice the amount they paid for it.

According to Thanh, a real estate agent in Hanoi, despite the perception that condominium prices have become exorbitant and deter buyers, he has successfully closed several deals in this segment. This demonstrates that the demand for housing is still high, and many people believe that waiting longer will not result in lower prices. Therefore, potential buyers often make their purchase decisions after considering just two or three options.

Reasons behind the rising prices

According to batdongsan.com.vn, condominium prices in Hanoi are now approaching those in Ho Chi Minh City. In the first quarter of 2024, the average price of condominiums in the capital city was 46 million VND per square meter, compared to 48 million VND per square meter in Ho Chi Minh City. In early 2018, the selling prices in Hanoi and Ho Chi Minh City were 27 million VND and 31 million VND per square meter, respectively. This indicates that over six years, the average price of condominiums in Hanoi has increased by 70%, surpassing the 55% increase in Ho Chi Minh City.

Nguyen Quoc Anh, Deputy CEO of Batdongsan.com.vn, explained the significant price increase of condominiums in Hanoi by highlighting two main factors. Firstly, there is still a limited supply of condominiums in the city. Despite efforts to improve legal procedures for developers, recent projects have only contributed approximately 20,000 to 30,000 units per year, while the normal demand is around 70,000 to 80,000 units per year.

Secondly, the demand for Hanoi condominiums remains high, not only from Hanoi itself and other northern provinces but also from southern regions. The interest in Hanoi condominiums from real estate seekers in Ho Chi Minh City has increased 7.5 times from the first quarter of 2021 to the present, compared to a mere doubling of interest in Ho Chi Minh City condominiums from local residents during the same period.

Furthermore, residents of Ho Chi Minh City are increasingly attracted to Hanoi condominiums due to the relatively stable and lower prices. Additionally, the rental yield for condominiums in Hanoi is higher than in Ho Chi Minh City. According to a Q1 report from Batdongsan.com.vn, the rental yield for Hanoi condominiums ranged from 4.1% to 4.9% since the beginning of 2023, while in Ho Chi Minh City, it was between 3.9% and 4.5%.

Moreover, some developers from southern regions have expanded their projects to the northern market. Loyal customers from the southern regions who have interests in these developers’ new projects in Hanoi are contributing to the increasing demand for Hanoi condominiums.

Image source: biztoday.us

Future outlook for condominium prices in 2024

According to an estimation from VARs, condominium prices will continue to remain high in both primary and secondary markets, especially in major cities, throughout 2024. Condominiums in the Hanoi market will become increasingly scarce, with new projects being priced above 50 million VND per square meter. The selling prices will continue to rise in the final stages of each project due to the limited supply.

The condominium segment is less affected by negative market factors in comparison to other types of properties, as it serves practical living needs. Therefore, selling prices will continue to trend upwards until there is an increase in the supply of affordable housing.

In the past, many people believed that condominiums were not profitable investments and that their value would decrease over time. They preferred investing in residential land, considering it to be a more optimal solution due to its liquidity and stable profitability. However, the current reality is that owning and selling condominiums is no longer considered a financial burden, but instead a sustainable and profitable asset. Renting out condominiums is also an effective way for investors to generate stable monthly income.

Dung Thuy Dung, CEO of CBRE Vietnam, predicts that condominiums still have potential for a 10% price growth this year and will only start to decrease when prices exceed buyers’ affordability limits. Among the four market segments (affordable, mid-end, high-end, and luxury), the mid-end and near-mid-end segments will draw the most attention and potentially become highlights of the market this year and in the coming years.

Many experts also anticipate that condominium prices will continue to rise due to the limited supply compared to the demand.

In conclusion, despite the challenges faced by the real estate market, the prices of condominiums in Hanoi have been steadily increasing. With high demand, limited supply, and attractive rental yields, owning and selling condominiums has become a financially rewarding opportunity. As a result, investors and homeowners are benefiting from the sustained profitability of this asset class.