The Southern real estate market, particularly in Ho Chi Minh City, has become a magnet for investors from Hanoi, with nearly 50% of them expressing interest, according to One Mount Group’s Market Research & Customer Insight Center. Of these, 20% are ready to invest immediately.
A key reason for this shift is the price difference between the two markets. For the first time in almost a decade, Hanoi’s apartment market has surpassed that of Ho Chi Minh City. Typically, Hanoi’s apartment prices are about 30% lower. However, as of May 2024, Hanoi’s apartment prices have surged ahead and continue to do so, now over 20% higher than in Ho Chi Minh City, as affirmed by Mr. Dinh Minh Tuan, Southern Regional Director of Batdongsan.com.vn.
With Hanoi’s apartment prices reaching a high threshold, investment profit margins are less attractive. The large investment costs coupled with limited potential for price increases have caused many short-term investors to withdraw. In contrast, Southern real estate, including areas like Binh Duong, Dong Nai, and Long An, remains alluring due to higher price growth rates and robust expansion potential.
These satellite areas offer reasonable prices and profitable investment opportunities. This capital shift indicates that investors are seeking markets with better profit margins rather than staying put in Hanoi, where real estate prices have stagnated.
Additionally, Northern investors are shifting their focus from short-term speculation to longer-term strategies. They are now considering sustainable income streams from rentals or holding assets over extended periods to benefit from infrastructure development. Areas like Thu Duc, Binh Duong, and Dong Nai are attracting interest due to their reasonable prices and potential for price appreciation as major transportation projects are completed.
As Northern investors turn their attention to Ho Chi Minh City’s real estate, they are particularly interested in specific property segments. According to batdongsan.com.vn, in their Southern expansion, 75% of Hanoi consumers opt for apartments, followed by shophouses/townhouses (53%), land plots (53%), detached houses/residential land (39%), villas (29%), and resort real estate (28%).
In practice, rental apartments in central areas near metro lines or industrial parks are popular. Additionally, real estate in peripheral areas like Binh Duong, Dong Nai, and Long An is attracting investors due to their relatively lower prices compared to the city center, coupled with high potential for price increases as transportation infrastructure continues to improve.
This is evident in the high absorption rates of 80-90% at projects with prices ranging from VND 26-35 million, such as the Benhill apartment project in Di An, Binh Duong, and the Thu An – Binh Duong project in Thuan An, Binh Duong, among others, with Northern investors playing a significant role. Even the newly launched booking for The Privé project in Thu Duc, Ho Chi Minh City, has attracted considerable interest from Northern investors.
It’s not just apartments; many Hanoi investors with capital of over VND 3 billion are also shifting their focus to low-rise segments in Binh Duong, Dong Nai, and Long An to seize the opportunity for price increases as these areas become new economic centers. Moreover, housing demand in peripheral areas is surging due to population decentralization from Ho Chi Minh City and the development of large residential and industrial zones.
For instance, Bcons Uni Valley, a commercial townhouse project in Di An, with prices ranging from VND 8-10 billion and an investment threshold of VND 3 billion, is attracting interest from Northern investors. According to Dat Xanh Northern, more than 50% of customers booking or expressing interest in this project are from Hanoi.
“The project’s superior business potential, proximity to the Ho Chi Minh City National University Village, and flexible financial policies, such as an initial capital requirement of VND 2.4 billion, a 65% loan with 0% interest for 18 months, and a profit commitment of VND 528 million in 2 years, have attracted Northern investors,” added Mr. Vu Cuong Quyet, General Director of Dat Xanh Northern.
Mr. Quyet also stated, “The Southern real estate market’s demand is driven by Northern investors. Many apartment, townhouse, and land projects launched in Ho Chi Minh City, Binh Duong, and Long An this year have recorded absorption rates of 80-90% in their initial sales phases, indicating a recovery in purchasing power.”
Evidently, with reasonable prices, high growth potential, and infrastructure development advantages, Ho Chi Minh City’s peripheral real estate is not only appealing to long-term investors but also suitable for those with moderate capital looking to enter the market. The capital flow from Hanoi’s real estate market into these areas reflects investors’ flexible investment strategies, demonstrating their willingness to explore beyond their traditional markets in pursuit of better profits.
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