Which real estate segment will increase in 2024?

Apartments will increase by 3-8%

In recent times, the real estate market has been difficult but real estate prices have remained high, even the apartment segment in big cities has maintained its upward momentum, setting a new price level to a record high, far exceeding the income of the majority of people. This is in contrast to the decline in prices and liquidity of land, villas, shophouses, townhouses, and townhouses.

The reason is that the number of apartments has decreased after many years. According to the Ministry of Construction's housing and real estate market information, in 2022, the country had 126 newly licensed projects, only 52.7% compared to 2021 and 17% compared to 2020.

Apartment prices will increase in 2024

Notably, there are no future housing projects in the affordable segment (priced below VND25 million/m2) eligible for capital mobilization and housing transactions in 2021 and 2022. The proportion of mid-range apartments (VND25-50 million/m2) eligible for capital mobilization and housing transactions has also continuously decreased by double digits since 2020.

Research data from the Vietnam Association of Realtors also shows that the number of affordable and mid-range apartments for sale has been continuously decreasing since 2019. Specifically, the total number of affordable apartments for sale in 2022 is only 10% compared to 2019.

The proportion of affordable apartment supply in the total supply of apartments for sale has also continuously decreased, from 30% in 2019 to 7% in 2022. In the period 2019-2022, the proportion of mid-range apartments also decreased to 54%, 46%, 34%, 27% respectively.

“In 2024, the selling price of primary apartments will continue to increase by an average of about 3% - 8%. The reason is that the short-term supply has not been resolved. The scarcity of new supply makes the market uncompetitive. Therefore, businesses with apartment projects opening for sale in this period are the “kings”, the Vietnam Association of Realtors affirmed.

According to the Brokerage Association, due to cash flow difficulties, investors will continue to keep prices high to maximize profits. In addition, high apartment prices are also due to many supporting factors such as: infrastructure is constantly being improved; investment and construction costs increase due to increased input material prices, labor costs, and financial access costs; land fund creation costs are too high, along with many "unnamed" costs arising when carrying out investment procedures, construction, and project development.

Industrial real estate maintains growth

According to the report of the Ministry of Construction, the industrial real estate segment seems to be "brightening". In the third quarter, the market was supplemented with new supply from a number of newly started and launched projects such as: VSIP II Industrial Park with a scale of 500 hectares in Nghe An, VSIP Can Tho with a scale of 900 hectares, VSIP Bac Ninh II with a scale of 282 hectares, Gia Binh II Industrial Park with a scale of 250 hectares in Bac Ninh, Long Thanh High-Tech Industrial Park with a scale of 410 hectares in Dong Nai...

With the amount of FDI capital in the processing and manufacturing industry in the first 9 months of this year continuing to lead in total investment capital with more than 14 billion USD, the trend of shifting capital flows of industrial real estate investment of multinational corporations into Vietnam in recent times has led to positive growth in demand for industrial real estate. The occupancy rate of industrial parks in key markets in the North and South has remained above 90% for both types of industrial land, factories and ready-built warehouses.

According to the latest report from Knight Frank, the industrial real estate market in Vietnam is still maintaining a stable development direction, along with a number of key factors that will appear in 2024, affecting both investors and tenants.

Knight Frank's report shows that the occupancy rate of industrial parks is currently very positive, at 78% in the suburbs of Hanoi and 92% in Ho Chi Minh City. As a result, the rental price of industrial park land in the two largest cities in the country will also increase in the period of 2022-2023, specifically increasing by 14% in the suburbs of Hanoi and 58% in the suburbs of Ho Chi Minh City.