Since the end of 2013, the property market in Vietnam began to recover, more options for investors and also the revolution of the apartment segment.
In addition, the government eased the policy for foreigners buying real estate in Vietnam since 2015, allowing foreign investors to own 30% of apartments in new housing projects, this quota has been quickly filled by investors from Hong Kong, Korea, Taiwan and China.
During that prevalent period, Vnrealtysolution.com has summed up 6 facts, which may support the coming investors have a right decision in estate market in HCMC.
1ST FACT: Foreigner purchases estate more than local
Before 2015, the number of foreigners owned property in VN was really limited. Since 2015, the government eased the policy, so that foreigners could buy up to 30% of apartments or 10% of townhouse in a commercial property project, the regulation is applied for all individuals or entities, on the condition that they have the entrance visa to Vietnam.
Also since this year, the quota of 30% for apartments has been quickly filled by investors from Hong Kong, Korea, Taiwan and especially China.
Based on the report of CBRE, in 2016, HCMC had 53% of total property were purchased by foreigners, this figure increased to 64% in the year after, and 69% in 2018, particularly at the end of September 2018, Chinese owned property even more than local, which were 31% and 24%, respectively.
2ND FACT: LTL is considered as a solution
Since 30% quota has been never enough, Long Term Lease agreement (LTL) or using local representative are considerable as solutions.
3RD FACT: Ideal accumulated return
The actual profit of the apartment usually falls into 10% -15% per annum at least.
Rental return often falls into 4% -7% depending on region and product. The smaller size the higher return, for instance one- bedroom in average can get 6-6.6% return per annum, the rate drops to 5.5%-6% and 4-5.5% for two and three- bedrooms, respectively. Doing short-term accomodation service like airbnb can bring the profit higher from 10-20% comparing to annual rent.
The value of the apartment is an accumulated channel, it is easy to buy and also easy to exploit compared to other segments.
4TH FACT: High and mid-end apartments have higher return than afforadable apartments
Although low-cost apartments have better liquidity, profits only reach a modest level after completion (usually about 10% per year) and high-end apartments are about 15% or even 20% -25% per year in some areas like Thu Thiem Peninsula.
5TH FACT: The ceiling price of the area established quickly.
The new project announced the price is usually higher than the project completed in the same area and segment. In 2017, a reported mentioned the highest price/m2 in HCMC market maintained around 5,000$/m2 for a project in D1, from the end of 2018 till now, this bar has kept setting up from 10,000 and even 14,000$/m2.
We also recorded that different phases of a certain project the price increased on average 5-10%, particularly, we recorded last year a project in District 2, the price could increase 20% between 2 continuous phase in the period of 6 months. Also for a project in Ha Noi highway, the price has been doubled between the first phase in 2016 and last phase in 2019.
6TH FACT: Room for appreciation is still lot of promised
Price of apartments is being pushed up, but many areas still have high growth rooms such as Thu Thiem. The price has been double in this area during the period 2016-2018, the add in value in this area is still a promised oftion for investors due to the 3 Thu Thiem bridges, Walking Bridge, Metro 2 still pending to expoloit.
Beside, the limited land in the central is also a reason pushing the price in the CBD district double in two recent years, from 5,000-7,000 at Bason now up to 13,000$/m2, surrounding area in D1 also maintain price around 7,000-13,000$/m2.
The evolution of MRT system is promising for investors to keep investing in. The projects closed by 1st Metro line (Red line) from D1 to Hanoi Highway of D2 and D9, has the growth rate in average 30-100% during the past 3 years.