In the context of Asia's growing population and aging levels and declining housing affordability, the apartment market is forecast to become a strong and attractive investment option. even contributing to solving housing challenges in the region.

In 2022, the world population will reach 8 billion people as forecast. With rapid urbanization and rising rents due to the current housing crisis, supply in several major global markets has become depleted.

In this context, multi-family real estate or condominiums have become a popular choice for both residential buyers and investors. In Asia-Pacific (APAC) alone, apartment buildings are at the forefront of the structural transformation process and are forecast to attract up to 20 billion USD by 20230.

Limited land fund

Housing space in Asia is increasingly shrinking and scarce, while the region has some of the world's most populous cities and some of the world's most expensive homes. Therefore, apartment projects are an effective way to use limited land funds, providing a more practical, cost-effective and space-saving option in dense urban core areas.

he population is aging and the lifestyle is clustered

Asia's population is aging rapidly. By 2050, 1 in 4 people in APAC will be over 60 years old. The number of people over 60 years old in the region will triple from 2010 to 2050, reaching nearly 1.3 billion people. Meanwhile, Asian people often focus on living together and connecting with family and society.

Apartment projects facilitate the needs of large families or friends living close together. These complexes also provide a diverse system of amenities suitable for many ages, ensuring safety and security as well as community activities, helping to promote social connections among residents or between generations. different generations in one family.

The resilience of multifamily real estate

The growing interest in multifamily properties also stems from their historically proven resilience to economic fluctuations and global uncertainty. According to the US-based National Multifamily Housing Council, investment in apartments outperformed other types of real estate, such as offices and retail, during the financial crisis. 2008. More recently, in the first 6 months of 2023, investment in this sector reached 4 billion USD – an increase of 2% over the same period last year although the total volume of investment in real estate in the region decreased by 24%. % over the same period.

The apartment market consistently delivers strong risk-adjusted returns across the APAC region and exhibits lower correlation with other asset classes. This asset class has proven to be particularly attractive thanks to its solid rental performance, driven in particular by factors such as population growth and affordability issues.

The low risk is due to unaffected rental demand and urban housing shortages as people need a place to live, even when the economy is struggling. Stability in occupancy and expected rental income make multifamily real estate a safe haven for investors.

Market developments are diverse

The strong post-pandemic recovery and market changes in APAC have continued to drive investment growth in apartment projects in the region.

Australia

The federal government's efforts to address the “rental crisis” have increased momentum for build-to-rent (BTR) projects and contributed to the growth of the sector. The policy changes include reducing the tax rate for BTR projects from 30% to 15% and increasing the depreciation rate for qualified BTR projects from 2.5% to 4%. They have significantly improved profits for the BTR sector, thereby attracting more investor attention.

China

In China, increasing institutionalization is likely to play an equally important – or perhaps even greater – role in increasing demand for the condominium market. China real estate investment trusts (C-REITs) are also seen as potential catalysts for the future apartment market, especially if these listed funds include residential real estate.

Post-COVID-19, China no longer recognizes online degrees from overseas institutions. As a result, more than 40,000 more Chinese students have returned to Australia by 2023, significantly impacting rental demand and available supply. This student group is now one of the main renters in the market, further driving demand for multifamily properties. Students from China also increased demand for apartments in Hong Kong and Japan.

Japan

In 2022, amendments to laws related to energy efficiency in buildings have made qualified apartment projects magnets for developers.

Additionally, another law ended tax incentives for designated agricultural lands, causing more plots to be sold for housing purposes, further expanding real estate development potential. multifamily in Japan.

Vietnam

Even though Vietnam's real estate market is slowing down, apartment prices continue to increase. According to Savills Vietnam, apartment prices in the last 4 years have increased by 77%.

A report from the Ministry of Construction shows that the price of new primary apartments opened for sale in Hanoi in the third quarter of 2023 will reach about 50.8 million VND/m2, an increase of nearly 7% quarter-on-quarter (about 3.6 million VND/m2). ), 14% by year (about 7 million VND/m2). Meanwhile, secondary selling price reached about 32 million VND/m2, an increase of 2.7% (about 800,000 VND/m2) quarter-on-quarter and 0.8% (250,000 VND/m2) year-on-year. In the city. In Ho Chi Minh City, the primary selling price reached more than 60 million VND/m2, while secondary apartments reached 45 million VND/m2, an increase of 3% compared to the previous quarter. The Ministry of Construction also said that this is the 19th quarter that primary apartment selling prices have increased consecutively.

Dr. Nguyen Van Dinh, Vice Chairman of the Vietnam Real Estate Association, Chairman of the Vietnam Real Estate Brokers Association, said that finding an affordable apartment under 30 million VND/m2 in Hanoi or Ho Chi Minh City is difficult. This is really a difficult problem. He said that the scarce supply, especially of cheap and affordable apartments, along with higher costs of land, materials and labor than before, has caused apartment prices to skyrocket. Meanwhile, real estate projects whose construction has stalled have made supply more scarce, unable to meet the needs of people looking for products with more reasonable prices such as apartments.