Amidst the vibrant landscape of Hanoi, the realm of real estate unfolds with dynamic shifts and promising avenues. For potential investors, comprehending the intricacies of this market is not merely a choice; it's a strategic imperative. As we delve into the current state of Hanoi's real estate, we unravel trends, explore growth potential, and navigate through diverse property investment options like residential real estate, commercial real estate, and land investment. Join us on this illuminating journey where market insights metamorphose into informed decisions, guiding you through the evolving world of real estate in Hanoi.

Overview of the Real Estate Market in Hanoi

Current Market Trends

As of the third quarter of 2023, the nationwide real estate market maintains a subdued state, yet Hanoi stands out with relatively stable transaction rates and selling prices. Despite the absence of sudden growth, this stability signals optimism amid market challenges. Ministry of Construction statistics for the same period reveal 863 housing projects underway nationwide, with Hanoi hosting 48 projects, surpassing Ho Chi Minh City in higher-ranked projects. The primary market witnessed a notable 7% increase in apartment selling prices compared to the second quarter and a substantial 14% rise from the same period in 2022. In the secondary market, average sales prices reach approximately 32 million VND/m2, reflecting a 2.7% quarterly and 0.8% yearly increase. Looking ahead to 2024, the apartment market in Hanoi is anticipated to strengthen, with an estimated new primary supply of nearly 16,000 units. Foreign direct investment (FDI) in real estate is poised to increase, with a forecasted influx of projects from foreign investors. Despite the potential for rental exploitation, estimated at only 1% - 2% of the total investment value per year, the market remains buoyant. Real estate prices in suburban areas, including Dan Phuong, Dong Anh, and Hoai Duc, have witnessed a substantial 12-15% increase compared to the 2018-2019 period. The eastern region, particularly Gia Lam, is emerging as an improved housing market thanks to ongoing infrastructure projects. The fourth quarter of 2023 is expected to see new project-driven supply, and by 2025, Dong Anh is anticipated to lead with a 23% market share of future supply.

Potential Areas for Growth in the Next 3-5 Years

West: After the merger of Ha Tay into the capital, the Western real estate structure experienced a significant rise. Key traffic infrastructure developments such as Nguyen Trai road, Thang Long avenue, and Le Van Luong street catalyzed a boom in the Western Capital's real estate market. However, the potential for this area remains relatively limited, with noticeable vacancies along Highway 32. The West holds promise as satellite towns like Hoa Lac, Son Tay, and Xuan Mai are planned, with potential benefits from university relocations and the proposed Metro line 5 to Hoa Lac.

East: As part of the Northern key economic triangle of Hanoi - Hai Phong - Quang Ninh, the East is poised for urban expansion. While suburban areas in the East currently offer lower apartment prices, the region holds potential for investors over the next 5-10 years. However, the Eastern region, including Gia Lam and Dong Anh, faces challenges such as extended travel time to the inner city. According to Savills' report, the East has witnessed robust growth in the low-rise segment supply, increasing from 8% in 2014 to 15% in the first half of 2023. The East, including Gia Lam and Hung Yen, is perceived as a future hotspot, boasting a large land fund, diverse real estate supply, and substantial infrastructure development.

North: The Northern region, encompassing Dong Anh and Me Linh, is expected to be one of the most potential areas in the Hanoi real estate market. The North benefits from key infrastructure projects such as Ring Road 2 and Ring Road 3, Nhat Tan bridge, Thang Long bridge, and upcoming Tu Lien bridge. Additionally, planning for Metro line 6 and Metro line 2 contributes to the North's growth potential. Soc Son is anticipated to become one of Hanoi's five satellite urban areas.

South: The South, including Hoang Mai and Thanh Tri, holds advantages as a traffic gateway and benefits from the planned belt road system. However, predictions for the area's real estate market are comparatively modest. Despite being the least favored, the South is strategically important for Hanoi's urban planning, with expansion approved to 2050.

In this landscape, the East, with projects like Ecopark and Vinhomes Ocean Park, emerges as a rising star. The area's large land fund, integrated urban areas, and natural incentives position it as a potential new center for Hanoi, attracting both residents and investors. As Vietnam's supply chains grow, and jobs shift from the old city, the Eastern region is poised for significant real estate development and price appreciation over the next 5 years.

Real Estate Investment Options in Hanoi

Land Investment

The land investment landscape in Hanoi reflects stability in transaction activities, with selling prices holding steady or experiencing slight increases, particularly in areas with ongoing investments in transport and technical-social infrastructure. For instance, land in Nguyen Khe, Hai Boi, and Co Loa communes (Dong Anh district) ranges from 18 to 40 million VND/m2, displaying consistent pricing from the beginning of 2023 to the present. Conversely, areas like Kim Chung, Di Trach, and An Khanh (Hoai Duc district), undergoing infrastructure expansion with the construction of Ring Road 3.5, have witnessed a modest price uptick of 5 to 7%, reaching 65 to 75 million VND/m2.

Residential Properties: Apartments and Houses

Recent developments in the Hanoi real estate market reveal a substantial number of mid-high-end products in newly opened projects. A notable shift, especially in the third quarter of 2023, is the emergence of affordable housing segments priced between 25 - 35 million VND/m2. Despite challenges in the mid-high-end segment due to high prices and lower transaction volumes, the affordable segment has gained attention. The apartment segment, in particular, remains resilient, serving genuine housing needs. Market research indicates a 1% increase in demand for purchases and a significant 6% rise in rental demand compared to the second quarter. Apartments priced from 2 - 4 billion VND are particularly sought after, showing signs of robust absorption, especially in the central core area of the Capital.

Commercial Real Estate

Hanoi continues to lead the country in attracting foreign investment (FDI), securing nearly 2.53 billion USD in new grants and capital increases during the first nine months of 2023. The retail sector is witnessing notable expansions from prominent brands like Muji, Starbucks, and Central Retail, drawing attention from various fashion and cosmetics brands from China, Korea, and Japan. This surge in activity is anticipated to contribute to a more vibrant market in the first half of 2024, reflecting the capital's resilience and attractiveness to international investors and retail giants alike.

Pros and Cons Analysis of Each Option

Land Investment

Advantages:

• Potential for Appreciation: Land investment in Hanoi offers the potential for substantial appreciation, especially in areas with ongoing infrastructure development and urban expansion.
• Diverse Usage: Land can be used for various purposes, providing flexibility for investors to develop residential, commercial, or mixed-use projects based on market demands.

Disadvantages:

• Lack of Immediate Income: Unlike rental properties, land typically doesn't generate immediate income, and returns depend on the timing of development and market conditions.
• Regulatory Risks: Land investments are subject to regulatory changes, and investors must navigate zoning laws and development regulations, adding a layer of complexity.

Residential Properties: Apartments and Houses

Apartments’ advantages:

• Steady Rental Income: Apartments offer a consistent stream of rental income, making them attractive for investors seeking regular returns.
• Lower Maintenance: Compared to houses, apartments often require lower maintenance, with building management handling common areas and exterior upkeep.

Apartments’ disadvantages:

• Limited Outdoor Space: Apartments may lack private outdoor spaces, limiting their appeal to tenants who prioritize this feature.
• Market Saturation: In certain areas, the market for apartments can be saturated, leading to increased competition and potential challenges in rental pricing.

Houses’ advantages:

• Larger Living Spaces: Houses provide more significant living spaces and often include private yards, appealing to families and individuals seeking more space.
• Potential for Value Appreciation: Similar to land, houses can appreciate in value over time, offering potential returns upon resale.

Houses’ disadvantages:

• Higher Maintenance: Houses typically require more maintenance, and property owners are responsible for the upkeep of both the interior and exterior.
• Longer Vacancy Periods: Houses may experience longer vacancy periods between tenants, impacting the overall rental yield.

Commercial Real Estate

Advantages:

• Higher Rental Yields: Commercial properties generally offer higher rental yields compared to residential properties, providing attractive returns for investors.
• Diverse Investment Options: Commercial real estate includes a variety of options such as retail, office spaces, and industrial properties, allowing investors to diversify their portfolios.

Disadvantages:

• Economic Sensitivity: Commercial real estate is often sensitive to economic fluctuations, and economic downturns can impact occupancy rates and rental incomes.
• Higher Entry Costs: The initial investment required for commercial properties is typically higher than residential properties, posing a barrier to entry for some investors.

Final Thoughts

In dissecting Hanoi's ever-evolving real estate dynamics, gaining insights into market trends, growth prospects, and diverse investment options is essential. Astute decision-making is the linchpin for flourishing real estate ventures. As you navigate the landscape, trust Viettonkin as your seasoned partner, offering specialized expertise and tailor-made solutions to optimize your property investments. Ensure your success in Hanoi's competitive real estate market with Viettonkin.