3 real estate investment channels promise to heat up in the year of the Dragon

After a challenging 2023, the real estate market is forecast to be unlikely to boom in 2024 but will gradually stabilize. Difficulties still exist such as limited supply, high anchor prices, and market sentiment that has not improved significantly, causing real estate investors to tend to choose a safe path.

Below are the segments that many experts predict will continue to attract investment capital because they can exploit cash flow and serve real needs.

Townhouse

Mr. Le Quoc Kien, an independent real estate consultant, said that townhouses for rent are a suitable investment channel for those who have idle money at the moment. If searched and screened carefully, investors can buy properties at good prices, about 10-15% lower than at the end of 2021. In fact, in Ho Chi Minh City, many homeowners under financial pressure have accepted to sell at prices 3-4 years ago.

Mr. Kien assessed that the secondary supply of townhouses is quite diverse and the advantage lies in the hands of buyers with "cash on hand". Although the transaction price is quite high, this group of assets meets many goals because it is both for living and for renting out in many different industries such as offices, shops or accumulating cash flow, preventing inflation. The profit margin of townhouses is usually about 1-2% per year.

In the context of low savings interest rates, below the inflation rate, investors want to keep money but in reality still "lose money". Meanwhile, home loan interest rates are at a good level, below 10% per year fixed for 2-3 years. Investors can expect that when the preferential interest rate ends, the market will have recovered and grown again in the period of 2026-2027. In the long term, buying a townhouse is a good channel to keep money and the price growth is quite stable.

Industrial real estate

In 2023, industrial real estate continues to be the leading bright spot of the market, with rental prices increasing by up to 20% in some places, despite economic difficulties. Data from the Vietnam Association of Realtors (VARS) shows that rental prices increased the most in the North, about 20% compared to the previous year, while in the South, they increased by 15%.

Ms. Trang Bui, General Director of Cushman & Wakefield, said that in the last months of the year, when demand from the retail market is forecast to increase by many times, the "thirst" for factory and warehouse supply will become even more intense. The total supply of warehouses in Hanoi and Ho Chi Minh City currently reaches 2 million m2 and 5.1 million m2, respectively. Meanwhile, industrial parks and warehouse logistics in these two large cities are all filled, with some places reaching nearly 100%.

The growing demand has led many investors to hunt for land funds in emerging markets, especially in the suburbs of Hanoi and Ho Chi Minh City, to expand investment in industrial parks for lease or develop supporting industries in 2024. However, experts say that investors in this real estate channel need to calculate the speed of infrastructure connection, even budget for infrastructure investment. Because the challenge in the current Vietnamese market is that infrastructure has not kept up with the development speed of industrial parks and clusters.

Apartment

Many market research units said that apartments are the type of real estate least affected by the negative impacts of the market last year because they serve a huge demand for real estate. Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan channel, said that the average profit rate when investing in apartments from 2015 to now is 12.5% ​​per year, including price increases and rental profits. This is a better and more stable profit than other investment channels such as stocks, gold, foreign currency, land or savings. The reason is that apartments are constantly increasing in price and the demand to buy and rent this type is always high.

A Savills survey of 30 Grade A and B projects in Ho Chi Minh City shows that apartment rental yields in 2023 will remain stable at 4.8% year-on-year. Ms. Giang Huynh, Deputy Director, Head of Research and S22M Savills Ho Chi Minh City, said that areas such as the old District 2, District 3 and District 10 have had the highest investment returns in recent times. She assessed that the total investment return on apartments is still higher than the deposit interest rate, showing that apartments are still a profitable investment channel.

"In the short term, rental yields are expected to increase due to a decrease in the number of apartments handed over and deposit interest rates remaining low," the expert said.

TB (according to VnExpress)