In the context of the rental apartment market continuously establishing new price levels, investing in apartments to earn double profits is the trend leading the real estate market in Ho Chi Minh City in the last 6 months of the year.

Apartment investment still makes profit

Continuous price increases in recent years have made apartments the most attractive segment for investors. The proof is that while the real estate market has just "stumbled" to "test the bottom" in the last months of 2023, the apartment segment has quickly recovered, caught the growth wave again, and even maintained its growth momentum throughout the difficult market period.

Research by the Vietnam Association of Realtors (VARS) shows that in recent years, apartment prices have grown by double digits on average each year. In 2023 alone, the apartment price index in Hanoi at the end of 2023 increased by 16 percentage points compared to the beginning of the year. Meanwhile, this index in Ho Chi Minh City has also entered a growth cycle again since the third quarter of 2023, thanks to the gradual price decline in high-end and luxury projects in the secondary market.

The average primary selling price of apartments nationwide is also high as most of the new supply to the market is products priced above VND40 million/m2, with almost no projects in the affordable apartment segment. VARS forecasts that apartment prices will continue to increase by about 10% for at least another year.

The first quarter 2024 market report recently published by Batdongsan.com.vn also shows that although liquidity is still quite low, apartment prices in Ho Chi Minh City continue to record an upward trend in the first 3 months of the year. Specifically, the price of high-end apartments in Ho Chi Minh City (from VND55 million/m2 onwards) increased by 5%, while the mid-range segment (VND35 - 55 million/m2) increased by 2% compared to the previous quarter. The average price of apartments in Ho Chi Minh City reached VND48 million/m2.

In terms of structure, the entire apartment market in Ho Chi Minh City has about 1,160 apartments for sale, of which nearly 680 are mid-range apartments, 314 are high-end apartments, and the rest are luxury apartments. The market continues to lack affordable housing.

According to CBRE Vietnam, in the first quarter of 2024, the Ho Chi Minh City market recorded a 54% decrease in the supply of apartments for sale compared to the previous quarter. However, the average apartment price in Ho Chi Minh City is at 62 million VND/m2, up 0.1% compared to the previous quarter.

Experts at Batdongsan.com.vn predict that apartment prices in Ho Chi Minh City will likely continue to increase due to the scarcity of new supply on the market and almost only high-end products.

A report from the Ho Chi Minh City Department of Construction also said that the supply of apartments in the coming time will still face difficulties due to legal problems affecting the implementation of projects on the market. Specifically, a representative of the Department of Construction said that in the first two months of this year, the agency only received 2 applications requesting notification of eligibility for capital mobilization, but through the review process, both projects were not eligible.

In addition, many projects that have been approved for investment are still stuck with procedures regarding financial obligations, land, planning, and some projects even have to review the project's legal status and land origin. Therefore, when the competent authorities receive and review, housing projects in these cases will not meet the conditions for capital mobilization. This shows that supply will continue to be difficult in the coming time.

In addition, another survey conducted by Batdongsan.com.vn in the first 3 months of the year showed that more than 62% of participants said they had decided to buy an apartment and assessed that this was the right time to buy because they could take advantage of the market's many attractive incentives and "hunt" for good prices.

Rental prices skyrocket
 

According to data from VARS, since mid-2023, when rental contracts were due to expire and be renewed, many apartments have increased in price by up to 40% compared to the previous period. Up to now, apartment rental prices continue to increase sharply. Currently, the average apartment rental price in Hanoi is from 8 - 15 million VND/month.

Apartment rental prices in Ho Chi Minh City have also started to increase slightly in recent times, especially in the inner city, where rental prices are much higher than in Hanoi. A mid-range apartment in the central area of ​​Ho Chi Minh City has an average rental price of 20 - 23 million VND/month. For example, the rental price of Vinhomes Golden River apartments (District 1) currently fluctuates between 19 - 23 million VND/month depending on the area, a sharp increase compared to the beginning of 2023 (only about 15 million VND/month).

In the non-central area, projects such as Sunrise Riverside, New Saigon (Nha Be district) ... also recorded an increase in rental prices due to the massive increase in demand from tenants. Rental apartments cost about 14 - 18 million VND/month. A one-bedroom studio apartment also costs VND8-14 million, up 15% compared to early 2023.

The recent increase in apartment rental prices is explained by many investors as being due to the sharp increase in apartment prices, causing many people to give up their dream of buying a house. Instead, they tend to rent houses. Although loan interest rates, including home loans, have decreased, home loans and monthly debt repayments are still a burden for many families as confidence in their future job and income situation is decreasing due to the volatile economic situation.

Another reason is that the demand for rental housing is increasing, due to the large increase in the number of foreign experts coming to Vietnam through FDI projects.

In addition, consumer trends have changed a lot as the Millennial-Z generation, accounting for 47% of Vietnam's population, focuses more on lifestyle, living environment, and utility systems to improve the quality of life. Most of them will choose to live in apartments with full amenities and a good living environment, rather than choosing residential land.

Information from VARS shows that apartment rental prices have increased relatively strongly in recent years, bringing a profit margin twice as high as that of renting townhouses. If in the past, most people thought that apartments were a type of unprofitable trading, only losing money, only choosing to invest in residential land, having a piece of land to settle down was the optimal solution because of its easy liquidity and high profitability, now, investing in apartments and then renting them out has become a popular trend in big cities. Therefore, investing in apartments is the main trend in the real estate market in Ho Chi Minh City in the last two quarters of this year.