Forecasts on the Development of Each Real Estate Segment from the Latter Half of 2023
Industry experts believe that real estate segments catering to essential needs will enter the initial phase of recovery. Subsequently, products within the investment real estate segment will experience a resurgence.
The real estate market entered a period of stagnation since late 2022. Consequently, most segments have witnessed price adjustments. Particularly, investment-related products such as land plots, townhouses, villas, and vacation properties have been notably affected.
Forecasts on the Development of Each Real Estate Segment from the Latter Half of 2023
However, from late last year until now, the Government, relevant ministries, and local authorities have taken swift and robust actions to aid the market. In just the first 6 months of 2023, there have been two online conferences held on February 17, 2023, and August 3, 2023, specifically addressing the real estate market.
Therefore, industry experts have assessed that the most challenging period for the real estate market has passed. Accordingly, the current time is considered a favorable opportunity for investors to enter the market. However, each real estate segment will exhibit distinct characteristics, target different audiences, and experience varying recovery timelines.
Forecasts on the Development of Each Real Estate Segment from the Latter Half of 2023
According to Mr. Tran Khanh Quang, the CEO of Viet An Hoa Real Estate Company, the uneven trend in condominium transactions is primarily attributed to the limited supply and the prevalence of luxury products. On the other hand, the single-family home sector continues to maintain transactions, and in fact, prices have not decreased significantly as anticipated.
As for land transactions, a strong recovery has yet to manifest. This is largely due to it being an investment segment where the majority is influenced by a bottom-fishing mentality. Therefore, it might be towards the end of this year before any signs of transactional improvement become evident in this real estate category. Mr. Quang also shared, “In 2023, the real estate market holds potential but remains somewhat uncertain; the opportune moment may only truly materialize in 2024.”
Forecasts on the Development of Each Real Estate Segment from the Latter Half of 2023
According to Dr. Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors (VARS), the apartment and residential segments catering to actual demand hold significant appeal, especially in major cities like Hanoi and Ho Chi Minh City, where the demand continues to rise steadily. If selling prices reach a reasonable range, around 30 to 35 million VND/m2, then real funds will undoubtedly pour in for purchases. Towards the end of 2023, the real estate segment serving genuine needs is expected to become livelier compared to the beginning of the year. Real demand products will recover first, followed by products in the investment segment.
Mr. Dinh believes that the land plot segment is perceived to be speculative in nature, hence its recovery is expected to be slower. As for the vacation real estate segment, its revival will be contingent upon the progress of legal clearance and issuance of land titles by local authorities. “Now, if a series of previously developed real estate products receive red book certificates, investor confidence is certain to gradually recover,” he stated.
Forecasts on the Development of Each Real Estate Segment from the Latter Half of 2023
According to Mr. Vu Cuong Quyet, CEO of Northern Green Land Real Estate And Services Joint Stock Company, the Hanoi and Ho Chi Minh City markets remain the two markets poised for the quickest recovery due to their large population scale and high demand. Other locations are expected to follow suit in recovery after these two cities.
Mr. Quyet evaluates, “The segments catering to genuine demand such as social housing and mid-priced apartments, with an average price range of 30-40 million VND/m2, will experience the earliest recovery. The vacation real estate sector will likely recover at a slower pace due to the absence of breakthroughs in the tourism industry.”
Forecasts on the Development of Each Real Estate Segment from the Latter Half of 2023
Mr. Nguyen Van Khoi, Chairman of the Vietnam Real Estate Association (VARS), has also provided forecasts on the future trends of each real estate segment.
According to Mr. Khoi, the condominium segment holds the highest proportion within the residential real estate market (accounting for about 90% of the supply of commercial residential properties). However, this segment can only recover from mid-2024 if challenges are promptly addressed and improvements are made. The supply and absorption rate of high-end and luxury segments will continue to rise. Meanwhile, for mid-range and affordable segments, the absorption rate will be lower despite substantial demand, due to increasingly limited supply. Condominium price levels are projected to keep rising.
Forecasts on the Development of Each Real Estate Segment from the Latter Half of 2023
The high-end villa and townhouse segment is not expected to experience significant breakthroughs in the short term; transaction volume is anticipated to become more active during the period of 2023-2025. With the supply located in outlying areas, buyers will have more options for suitable and attractive locations and prices.
For the land plot segment, due to increasingly limited land resources and fewer prime locations available, as well as lower profit potential, the urban areas of major cities during the period of 2023-2025 are projected to experience limited significant changes in both prices and transaction volume. As for neighboring areas/satellite towns of major cities or regions with urban planning/new districts (especially around Hanoi and Ho Chi Minh City), localized price increases and transaction activity are forecasted to continue due to the conversion from agricultural land to residential and urban land.
Forecasts on the Development of Each Real Estate Segment from the Latter Half of 2023
Mr. Khoi predicts that the tourism and resort real estate segment will recover despite facing several challenges. In particular, the vacation townhouse and resort villa segments, especially those located by the seaside, are expected to see promising growth during the period of 2023-2025.
The homestay segment, however, is expected to have a slower recovery among the various types of resort real estate post-Covid-19. Nevertheless, this segment holds promising long-term prospects in line with the trend towards experiential travel, sustainable and eco-friendly living, nature preservation, and ecological environment protection.
