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Aug 11, 2021 / 17:32

Low-budget apartments fast becoming attractive long-term investment

Supplies of low-priced apartments at below VND2 billion (US$87,300) are predicted to disappear in Hanoi in the upcoming one or two years.

As supplies of low-budget apartments (prices below VND25 million or $1,085 per square meter) are becoming scarcer in two major cities of Hanoi and Ho Chi Minh City (HCMC), investment in this segment would ensure long-term value and financial affordability amid the Covid-19 pandemic.

 Low-priced apartments are fast becoming an attractive investment option. Photo: Doan Thanh

Nguyen Khai, an individual investor from Hoang Mai District (Hanoi), bought a two-bedroom apartment from the Osaka Hoang Mai housing project one year ago for VND1.3 billion ($56,462) for renting purposes.

“After two years, my apartment is now valued at over VND1.4 billion ($60,800), or a profit of nearly VND100 million ($4,343), while the rental fee is enough to pay the interest,” Khai told The Hanoi Times.

“With a limited budget, I had to choose an affordable product for long-term investment, and therefore, low profitability in return,” Khai continued, noting using bank’s loans for high-risk investment at this Covid-19 climate would be unwise.

For many, investment in a low-priced apartment may not be attractive, but ticks the safety box as the pandemic is severely affecting people’s income.

As such product is priced at a more affordable range, most investors do not need to seek bank loans, thus reducing the financial burden.

A survey conducted by VnExpress in the first half of 2021 showed the searches for low-budget apartments of below VND2 billion in Hanoi made up 40% of the total, followed by those seeking properties in the VND2-3 billion price range who account for 26%.

In Hanoi, the majority of low-budget apartments are in satellite districts such as Thanh Tri, Hoang Mai, Gia Lam, Hoai Duc, Dan Phuong, Ha Dong, with projects of Vinhomes Smart City, Eco City Viet Hung, Phuong Dong Green Park, or Thang Long Capital.

Financial expert Nguyen Huy Thanh said going for affordable investment is the right move during this period.

“A two-bedroom apartment that cost VND2 billion would have an average rental fee of VND5-7 million ($217-304), around the same interest rate from the bank,” Thanh told The Hanoi Times.

According to Thanh, the supplies of low-priced products would become thinner in both Hanoi and HCMC, so naturally, the price would go up even for such an affordable segment, Thanh continued.

Attractive investment option

Statistics from the Ministry of Construction (MoC) revealed since early 2021, the average apartment price in Hanoi rose by 5-7% against late 2020.

Vice General Director of Nguyen Quoc Anh said with a price range of below VND2 billion, investors do not have many investment options in two major cities, adding they make up 70% of the demand in the real estate market.

“The definition of a low-budget apartment is no longer applied for prices below VND25 million per square meter but would move to VND30-35 million,” Anh told The Hanoi Times.

Sharing the same view, Nguyen Hoai An, director of Research Segment of CBRE Vietnam said during this low-interest-rate environment, the property market is fast becoming an attractive investment option.

“Scarce supply would lead to higher prices, and investors should take advantage of the current situation before the market prices moving to a new level,” An added.

“In this difficult economic climate, the possibility for new products under VND2 billion is low, not to mention limited land resources,” she stated.

Vice General Director of Hai Phat Land Nguyen Thang said in the HCMC, low-priced apartments of below VND2 billion no longer exist.

“A similar situation could happen to Hanoi in the upcoming one or two years,” Thang said.