The Increasing Demand for Condominiums in Vietnam
At the “Identifying Business and Investment Opportunities in 2024” conference held earlier today, experts and businesses expressed optimism about the recovery of the economy. According to Dương Thùy Dung, the Chief Executive Officer of CBRE Vietnam, FDI plays a crucial role. Despite various challenges, local investors still focus on traditional methods, such as mergers and acquisitions, when it comes to developing domestic projects. However, acquiring properties with proper legal documentation has been a challenge.
Real Estate Market Opportunities
With an improving macroeconomic landscape and low interest rates, investors are actively seeking high-yield investment channels. Dung believes that industrial real estate is the brightest spot in the market, with a success rate of 50% in investment projects. On the other hand, commercial real estate is an attractive market for investors, but the success rate is only 5-10%. Dung attributes the failure of these products to pricing differentials, legal issues, and ownership structure.
Furthermore, the best investment segment in 2024 depends on the total investment amount. Commercial real estate and industrial zones continue to be preferred by investors. Affordable housing and mid to upper-midrange properties are currently the most sought-after segments in the market.
Rising Prices in the Condominium Market
Hanoi’s primary condominium market has recently caught up with Ho Chi Minh City in terms of pricing. In the first quarter of 2024, Hanoi witnessed an 11% increase in the number of launched condominiums compared to the same period last year. However, the supply of land-attached real estate decreased by 98%. The prices of luxury and high-end condominiums pushed the overall primary prices in Hanoi to 56 million VND per square meter, a 5% increase from the previous quarter and a 19% increase from the same period last year.
In contrast, Ho Chi Minh City saw a 54% decrease in the primary condominium segment and a 98% decrease in land-attached real estate. The average primary price in this market was 62 million VND per square meter, a 0.1% increase from the previous quarter and a 3% decrease from the same period last year.
CBRE representatives predict that primary prices in both Hanoi and Ho Chi Minh City will continue to rise due to the expected influx of new supply in the luxury segment. Specifically, prices in Hanoi are expected to increase by 10% in 2024 and by approximately 3% annually in 2025 and 2026.
Second-tier markets are also experiencing significant price growth. According to CBRE, prices in Hanoi’s second-tier market increased by 6% compared to the previous quarter and by 16% compared to the same period last year. The resale market in Hanoi is also expected to continue its upward trend, with price increases ranging from 16% to 20%.
Managing Risk and Seizing Opportunities
During the conference, both TS Võ Trí Thành and TS Cấn Văn Lực emphasized the importance of businesses and individual investors clearly defining their risk appetite and risk management strategies before seeking breakthrough opportunities. It is crucial for businesses to actively explore and access government support programs, establish connections with relevant industries, partners, and associations, and keep up with digital and sustainable trends. As TS Võ Trí Thành summed it up, the key to success lies in a combination of “solid defense, seizing opportunities, and staying abreast of trends.”
As the Vietnamese economy continues to recover, the demand for condominiums is expected to rise further. Investors are advised to keep an eye on the evolving market dynamics and take advantage of the opportunities presented in this thriving sector.
Source: Business Today