At the “Cash-Home Real Estate: Apartment Segment Leads Hanoi Market in 2024” Seminar that recently took place on 24 April, experts shared that the positive impacts of the macroeconomy, government management, and new laws have influenced the real estate market. In the fourth quarter of the fourth quarter of 2023, the market was already significantly more buoyant than in late 2022 and early 2023. The market further improved in the first quarter of 2024.
Transaction prices have continued to grow by an average of 5%, with products priced at 3 billion VND and under being sought after by many. The products that most interest people are apartments and land; prices and transaction volumes in densely populated areas and industrial zones have increased sharply by around 20%.
The residential real estate segment is also more active, with transaction prices for houses ranging from 3-5 billion VND attracting much attention and many customers. The industrial real estate segment is also starting to pick up, however, the resort real estate segment has yet to see any growth.
Over the past period, 8,000 apartments were launched for sale nationwide, with 3,000 of these being in Hanoi alone. The apartment index in the Hanoi market has increased sharply by around 48% compared to the first quarter of 2019, while in Ho Chi Minh City it has increased by 21% compared to 2019. This is a genuine upturn, and a more dynamic growth in the real estate market.
Mr. Pham Thanh Hung – Vice Chairman of the Board of Directors of Cen Group.
According to Mr. Pham Thanh Hung, Vice Chairman of the Board of Directors of Cen Group: “We, those working in real estate, definitely feel that the current real estate landscape is experiencing a surge in prices, particularly in the apartment segment in Hanoi. The reason for this, I believe, is a necessary adjustment given that the real estate market has faced many difficulties in recent times in terms of supply, legal issues, the market, and the collapse of the financial system, which has left investors with an excess of cash.”
He gave an example, citing a financial report from the first quarter of 2024 that indicated that approximately 18 million billion VND was sitting in commercial banks and could not be disbursed. Those who need money do not have sufficient assets to secure loans, while those who have sufficient assets to secure loans do not need to borrow money. As a result, commercial banks have had to lower interest rates to between 5-6%, a historic low.
“With interest rates falling, investing and developing real estate has created a positive cash flow. Rental income from real estate can now cover the interest on loans taken out from banks. In fact, many people are now willing to buy apartments to rent out, then use the rental income to rent a villa in the same area to live in. This shows that at present, apartment real estate is generating a very good cash flow,” Mr. Hung said.
In addition, Mr. Hung believes that real estate plays three main roles: firstly, as a consumer good; secondly, as a special means of production (such as agricultural land, industrial land, infrastructure land); and thirdly, as an investment channel (according to statistics, over 70% of real estate in Singapore generates cash flow, but in Vietnam this figure is only 15%). Finally, real estate assets serve as a means of accumulating wealth.
Apartment prices have now increased to a level that is relatively balanced in terms of supply and demand, and there will certainly be some adjustments, but according to Mr. Hung, it is impossible for prices to fall. He believes this because the market currently does not have many products that can replace apartment buildings. There are products with cash flow and value, but which are illiquid; and there are products with full legal documentation, but which do not have any cash flow value.
