Buying houses for lease to lead investment trends in 2020

While the number of ads about property sales increased by 40 percent in 2019, the number of ads about house and room leasing increased by 50 percent. The rent also increased sharply by 30-35 percent.

According to Dang Hung Vo, a respected real estate expert, who was Deputy Minister of Natural Resources and the Environment, the growth of the real estate market in 2019 slowed down.

Buying houses for lease to lead investment trends in 2020



The legal review campaigns caused a series of projects to become stagnant. Meanwhile, the collapse of Cocobay project made investors shrink back and the market cool down. As a result, the house supply has become short, which pushed the prices up. Experts all said house prices will increase sharply in the next 2-3 years.

A report of DKRA showed that the land and house prices soared rapidly in 2013-2017 and the price escalation is believed to continue as the land bank in urban areas is getting scarcer.

CBRE Vietnam reported that the supply in 2019 decreased by 52 percent in HCM City and by 24 percent in Hanoi. Meanwhile, the house price increased by 6 percent in Hanoi and 12 percent in HCM City.

Observers can see the serious imbalance in the market supply and demand. In inner districts of HCM City, especially district 1, the land price is hovering around $10,000-50,000, or VND232 million-1.15 billion per square meter. In some projects, the prices are higher, at $70,000-80,000, or VND1.6-1.8 billion per square meter.

The land and house prices soared rapidly in 2013-2017 and the price escalation is believed to continue as the land bank in urban areas is getting scarcer.

The figures are much higher than the $30,000 (VND696 million) per square meter in 2018.

 


They believe that the decision by local authorities to raise the official land price frame will make the market prices escalate further.

According to Le Hoang Chau, chair of the HCM City Real Estate Association, the property prices comprise different components, including the expenses to fulfill the obligations to the state. The expenses account for 10 percent of the cost prices of apartments, 30 percent of houses on streets and 50 percent of villas.

“Cost price is the basis for realtors to determine the selling prices of products. Therefore, the decision by local authorities to adjust the land price frame will surely have impact on the market price,” Chau concluded.

Meanwhile, some real estate experts estimate that in housing projects, expenses on land account for 10-14 percent of cost price. Therefore, the selling prices will increase once the land prices increase.

Nguyen Quoc Anh, deputy director of batdongsang.com.vn, said investors now buy houses to rent instead of buying for reselling. The number of offers to sell real estate on the website increased by 40 percent in 2019, while the number of offers to rent increased more sharply, by 50 percent.

Kim Chi 

Vietnam real estate market faced difficult year in 2019

Vietnam real estate market faced difficult year in 2019

The market was quiet most of the time in 2019 though it witnessed many transactions in some segments in the first months of the year.

Foreign investment in real estate shots up

Foreign investment in real estate shots up

Additional foreign investment inflows in real estate went up during 2019 while credit in the sector bucked a downward trend, signalling its reduced heavy reliance on bank loans.

 
 

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