Which Segments Interest Property Investors Most?

2:12:17 PM | 4/4/2019

Midmarket housing in major cities and vacation property in Vietnam are expected to grow well in the coming time.

Reasonable prices

Midrange property, with reasonable prices most people can afford, is the center of interest of property investors. Besides, townhouses, terraced houses and real estate products developed near social security facilities will also attract customers who have real demand.

Mr. Duong Duc Hien, Housing Business Manager for North and Central Region of Savills Vietnam, said that mid-end real estate segment fared very well in 2018, especially in Hanoi where midrange products led the market. In addition, villas, townhouses and shophouses progressed well in 2018. Currently, homebuying demand is still high, stemming from migrants from other localities, household separations and housing downgrading in cities. Customers not only seek quality in every individual product but also expect a strategic vision of investors who develop projects squarely in line with regional and city development plans (particularly transport infrastructure development and social security plans).

He analyzed that the project position is still the top priority when investors choose a housing real estate. However, with a developed market, an upgraded and optimized transport infrastructure, distance is no longer a barrier for city residents. In developed countries, many people are willing to drive one or two hours to get to work in exchange for living in a quieter, more open space. According to market development stages, the importance of position will diminish. Therefore, investors must have a long-term vision when making their projects, to ensure projects will interest buyers over the next 5 - 10 years when the infrastructure develops. Meanwhile, customers should have a more open view of housing products, especially when they buy for long-term investment: A disadvantage of position today may no longer exist when infrastructure develops, a premise for a real estate product to increase in price. This outcome depends on how they study their products.

Current housing products will be redesigned to better suit customer needs and global trends. For example, the currently preferred layout of three bedrooms in a ​​90-square meter apartment has revealed many shortcomings, resulting in its gradual disappearance in the market. A flat will be expanded with balconies, loggias and windows to catch natural light.

Prospect of lifestyle product line

The frenzy of vacation property cooled significantly in 2018. Second home supplies shrank from three years ago. Customers return to conventional real estate products such as sea-looking villas, sea-looking apartments and resort villas.

The lackluster performance of vacation property segment also partly came from development plans of each locality. However, driven by tourism development, this is still a potential market when many localities build and expand airport operations with more domestic and international flights. This lifestyle product line induces steady demand from customers with unemployed capital who regularly go on holiday and seek to invest to earn income from rental service.

“In fact, investors rushed to buy land for second home property in only some localities like Nha Trang, Phu Quoc, Quang Ninh, Da Nang and Bac Ninh. However, this wave comes from water-treading investment, contrary to the nature of residential land, a long-term investment product,” said the Savills representative.

Mr. Hien said that in the vacation property segment, the allocation of classes may be somewhat unreasonable, giving rise to transient oversupply. In the short term, these products will gradually be absorbed, especially in fast-developing markets such as Da Nang, Nha Trang, Phu Quoc and Quang Ninh, where there is huge potential for tourism development and international tourist attraction.

Residential land deals and profits should only come from developing markets with well-connected transport infrastructure, for example, suburban projects or areas. These short-term investment waves therefore lacked a sustainable foundation and quickly set back. This also warns investors to research and explore investment products before making investment decisions.

He added that, taking into account fundamental factors of the real estate market such as GDP growth, FDI inflow, purchasing power and property credit, the market still has a solid basis for sustainable development. Price volatility is localized, not universalized, especially in the two big markets of Hanoi and Ho Chi Minh City.

The fear of property bubble burst did not happen in 2018, but the market needs to be cautious in controlling real estate lending credit, construction quality and progress in 2019.

Huong Ly