Investors ‘win big’ with real estate in suburbs
Big investors are pouring money into properties in the suburbs, which they had previously ignored.
Nguyen Minh Hai in Ba Dinh district in Hanoi returned to Vietnam with a lot of money he saved after 10 years of working in the US.
The people with huge amounts of idle money like Hai are sought by commercial banks and considered VIP clients. Banks offer them ‘special’ interest rates, far higher than the interest rates applied to normal clients.
However, Hai decided not to deposit money at banks, but instead bought real estate in suburban areas.
His decision to buy a villa in Long Bien at over VND10 billion was viewed as unreasonable, because the villa was far from the central area, and he didn’t have urgent demand for accommodations.
However, Hai made a wise decision. The price of land and real estate products in the district has been increasing rapidly together with improved infrastructure and transport conditions.
|Vietnamese save nearly 50 percent of their income, twice as much as other nations. Of this, a large proportion is spent to buy real estate, which explains why prices in Vietnam are high.|
“If I deposited money at that time, I would not have such a big amount of money now. The interest from deposits are clearly incomparable to real estate price increases,” he said.
Experts said the real estate prices in Vietnam continue escalating because of the people’s habit of hoarding properties.
Vietnamese save nearly 50 percent of their income, twice as much as other nations. Of this, a large proportion is spent to buy real estate, which explains why prices in Vietnam are high.
Nguyen Van Thanh, a well known real estate broker, said many investors can make big profits from speculating in real estate in the suburbs. Long Bien, Dong Anh and My Dinh areas in the past did not catch the attention of investors because they were far from the central area. However, land prices there have soared recently.
He went on to say that many investors want to ‘bottom fish’, but they cannot, because the prices have not decreased. The price decreases are only seen in real estate for leasing, while other real estate prices are stable or have increased slightly by 1-3 percent.
The people with idle money pour money into real estate because they believe that the investment channel is the safest for now. Big investors won’t leave the market even though it is quiet, because they can see long-term prospects.
Le Hoang Chau, chair of the HCM City Real Estate Association (HOREA), affirmed that the impact of Covid-19 is just temporary, and that real estate is always a potential investment channel in the long term.
Experts said that real estate prices are increasing because of higher input costs and the exhausted land fund.
Real estate firms are again postponing sales and investment plans after new Covid-19 cases were discovered in late July in Da Nang.
As bank deposit interest rates are on the decrease and gold is becoming more and more expensive, idle money is expected to flow into the real estate market.