Low-rise Transactions Soar
A recent low-rise project in Dan Phuong, Hanoi, has created a stir in the city’s west, with 90% of the units in one subdivision sold shortly after its launch.
According to the project owner, the remaining subdivisions will be introduced in the coming period. The lowest price at the project is over VND 20 billion per unit.
It’s not a coincidence that many real estate businesses have almost entirely stopped developing apartments in the past two years. In addition to the time-consuming process of apartment construction and handover (about two years), low-rise buildings offer higher profit margins and stronger purchasing power.
A western Hanoi project sells 90% of its low-rise units upon launch. |
The Vietnam Real Estate Brokers Association’s report for 2024 recorded a 65% absorption rate for newly launched low-rise projects, equivalent to 9,000 transactions.
VNDIRECT Securities Corporation’s analysis of Hanoi and Ho Chi Minh City markets continues to show strong housing demand, with absorption rates exceeding 100% in 2024. Hanoi’s demand remains high, with an absorption rate of 100.5% after new supply increased by 202.6% year-on-year, the highest since 2019.
VNDIRECT notes that construction activity has picked up, signaling future supply growth. In 2024, short-term receivables and customer prepayments to residential construction contractors increased by 8.6% and 7.3%, respectively, compared to the previous year.
VNDIRECT predicts that an important short-term driver supporting housing demand in 2025 will be the maintenance of low-interest rates, in line with the State Bank’s policies. The average floating interest rate at commercial banks rose in January 2025 before falling again in February, following the State Bank’s directive to support the economy.
Investors on a “Land Hunt”
Investors’ money is flowing not only into the low-rise segment but also into land, which has attracted buyers in recent times.
The Brokers Association’s report released on March 22 indicates that investment capital is flowing towards areas with well-developed infrastructure and planning. The trend of “hunting” for land in areas with merger plans and infrastructure development is most evident. In some localities with plans to merge into provinces or cities with higher land price levels or expected to become new administrative centers post-merger, land prices have been soaring, even setting new peaks for 2022.
Particularly, the capital cost of investing in major cities like Hanoi and Ho Chi Minh City is extremely high, prompting many investors to look for alternatives in peripheral areas or places with future development potential to optimize their investment returns.
As a result, regions with low price levels in the provinces and cities surrounding Hanoi, such as districts and communes in Ninh Binh, Lang Son, Bac Giang, and Hai Duong, are being “hunted.”
In the south, areas with significant infrastructure investment, such as Binh Thanh, Long An, and Binh Duong, are also experiencing a resurgence in transaction waves.
According to the Brokers Association, the trend of “land hunting” is increasing in some areas, but investors should be cautious of artificial price surges. It is crucial to thoroughly research the land price levels in the intended investment areas and be well-informed about the progress of planning changes to assess risks and growth potential. Additionally, liquidity and the ability to generate cash flow from real estate should be prioritized. Places with specific planning implementation plans and those in the infrastructure development phase or projects with modern and well-invested facilities that attract residents will be safer choices than areas where prices are driven solely by rumors.
Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, stated that the Vietnamese real estate market in 2025 is full of potential but also fraught with risks. Understanding investment trends, market demands, and legal policies will enable businesses to optimize their investment strategies and gain a competitive edge. Moreover, businesses must be agile in adapting to technological advancements and new business models. Only those with long-term strategies, a firm grasp of trends, and thorough preparation will succeed in this volatile real estate market.
Ngoc Mai
– 17:49 22/03/2025
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