Buying apartments for lease: hot investment channel in 2017
Nguyen Nam Son from Vietnam Capital Partners, analyzing the real estate investment trends in Vietnam, said that investment depends on GDP and people’s income.
In 2005, when the GDP per capita was $700 per annum, idle money was used by people to buy their first houses for living. The majority of idle money now is used to buy high-end apartments and resort real estate in the future for lease.
The number of successful real estate transactions has been increasing considerably since 2014. There were 40,000 transactions in 2015 and 15,300 in the first half of 2016, about three times higher than the years before, when the property market was in hibernation. The transactions exploded in the high-end market segment.
The attractive profits from leasing and property price increases attract investors to buy apartments for lease. The trend has been growing in the last two years.
Analysts said large projects developed by prestigious investors such as Vingroup, Novaland, Sungroup, FLC, Him Lam, Phu My Hung and Vhinajico have been selling very well. Vingroup alone in 2015 sold 12,600 products, while Novaland sold 6,000. It is estimated that of every 10 house buyers last year, five bought Vingroup and Novaland products.
Marc Townsend from CBRE Vietnam, a real estate service provider, said the demand is high for houses as accommodation and for apartments for lease. The supply of middle- and high-end products has been increasing to satisfy demand.
Experts believe investors poured their idle money into mid- and high-end apartments because leasing can bring good and stable profits. The rental income in US dollars is 6-7 percent in HCMC and 5-6 percent in Hanoi.
The house leasing market has been stable in Vietnam for many years thanks to stable demand from expats, especially from South Korea and Japan. Meanwhile, the average rent increased by 5-10 percent in 2016.
The high possibility of high-end real estate price increases has also attracted investors.
The reports by some real estate trading floors showed that in 2015, the property price increased by 15-20 percent
Some prestigious institutions predicted that the middle class in Vietnam may account for half of the Vietnamese population.
Vietnam has allowed foreigners to buy houses in Vietnam and 22 percent of overseas remittance, or $12 billion, goes to the real estate market. This shows the high demand, which is the driving force behind the high-end market segment.
