- Your Consultant
- Green Growth
The “Attraction of Suburban Real Estate” talk show about the rising wave of project developers and individual investors hosted by VIR last weekend drew a large number of viewers on its fan page and digital channels.
|Talk show: Attraction of Suburban Real Estate|
The National Assembly is considering five large-scale transportation infrastructure projects in Hanoi and Ho Chi Minh City, in the form of three highways and two ring roads, as well as the next phase of the Ho Chi Minh Road, which fosters the growth of neighbouring markets in the country's two biggest cities.
Several large players are hunting new and promising areas with lots of prospects for expansion. Investors are attracted by incentives, room for price adjustment, and profit possibilities.
“Urban residents are increasing rapidly because of the equally-distributed socioeconomic development results. Those residing in the metropolitan regions around the biggest cities and further field may have access to information, services, and commodities without moving to the city centre,” said David Jackson, CEO of Colliers Vietnam.
Jackson added that ongoing improvements in living conditions will boost demand for exceptional living spaces, and projects developed by major investors on the outskirts are currently the top priority.
There are a number of projects with substantial land funds that can fulfil a range of purposes, resulting in more alternatives for consumers in need and engaging storylines to attract investors.
For instance, the liquidity rush at Vinhome Ocean Park 2 (The Empire), a 460-hectare mega-project in Hung Yen province, has been a hot topic in more recent times. Albeit located far from the centre of Hanoi, the construction of an all-in-one ecosystem complex creates a unique value that attracts homebuyers and investors.
|By 2030, more localities outwith the biggest cities hope to have bigger and better transport links|
Nguyen Thanh Quyen, general director of Thang Loi Group, highlighted the trend towards remote developments is even greater in Ho Chi Minh City. According to the company’s 2021 market research, 78 per cent of clients from the city wished to invest in suburban areas. Notably, clients aged 31-45 years old accounted for 51 per cent of the total.
“When localities create a central area to attract people, the real estate market in the suburbs develops inexorably, indicated by the ever-increasing price level. Furthermore, the completion of connected infrastructure that helps reduce travel distances is a driving force in raising the value of real estate in the suburbs,” Quyen said.
Duong Thuy Dung, senior director of CBRE Vietnam added, “Typically, it takes 3-5 years to acquire clean, legal, and ready-to-be-launched property in the central cities. Meanwhile, in other provinces, investment procedures are simplified. This helps drive developers to move outside the centre.”
In addition, work prospects in suburban communities have improved dramatically as a result of improvements in infrastructure, the economy, and the urban modernisation process.
Tran Thi Cam Tu, general director of EximRS, stressed the importance of the developer's reputation and competence in shaping the success of a project.
“They should carefully analyse the optimal site for a residential/urban project. Currently, there are two popular selection methods. One is to follow the ‘oil slick’ strategy, which is to gradually expand to the surrounding area from the existing area. Another method is to follow the connected transport infrastructure.”
Typically, Tu said, it is 10-15km away from current residential areas and takes 45-60 minutes to move from the centre. If the traffic infrastructure is better developed, the distance might increase by 20-25km.
Quyen from Thang Loi Group added that in the process of redirecting investment away from major metropolitan areas, investors need to thoroughly examine the market to identify the target audiences, study their target clients, and complete local amenities. “Currently, more than 80 per cent of projects in the suburbs serve the subdivision and sale of lots, with little interest in the construction and development of facilities as specified in the design,” Quyen said.
Nguyen Van Dinh - Vice chairman, Vietnam Real Estate Association
Real estate is considered an attractive investment channel. The currency inflow comes from money saved by individuals as well as the shifting of the capital from other ineffective investment channels. However, the sector is seeing a demand over supply situation.
Thus, any real estate products which are launched are made as a good sales pitch. Real estate projects in the outskirts of cities are becoming the focus of incredible attention. One factor making the outskirt real estate segment attractive is the government’s eagerness in completing the transport infrastructure, especially expressways and bridge systems.
The community of real estate developers proposed that the government should not tighten the capital source for entire projects, which will impact the supply source for the market. Instead, it needs to policy to prevent virtual projects as well as the unreasonable land collection, and inflated price situation.
When customers study a project, they have to prioritise its planning and legality. Besides that, they should follow the construction process of the project’s infrastructure and other infrastructure in surrounding areas.
Nguyen Thi Hong Hue - Deputy general director, MIK Group
The concept about real estate in the outskirts of a city has undergone significant changes in recent years. Outskirts is now deemed an area about 2-3 hours drive from the city centre. This expansion aims to render better investment opportunities to people and businesses.
The real estate market in 2022 is so peculiar, with many projects selling very well. The demand for real estate products as a place to live in and for investment purposes are both huge.
Projects’ internal factors are vital to attract investors. Two prime factors are the location and having good market potential. For instance, our Imperia Grand Plaza Duc Hoa in Long An province has a prime location, a limited supply of just several hundred plots, and distinct design features.
For the outskirts, having a well-conceived general planning space is important to provide prospective residents a deserving living space, along with the developers’ efforts to provide a full suite of amenities to residents.
Having transparent legal records, market potential, and developer prestige are behind efficient projects in the city’s outskirts.
Tran Van Duong - General director, Five Star Group
Technical infrastructure is the most important aspect in determining the value of a piece of real estate. With related initiatives, more products will be available to customers in a shorter period of time, and the customer database will grow as a result.
Suburban real estate markets are expected to develop after the city’s infrastructure is completed; this is because the market in Ho Chi Minh City has been depleted in recent years and prices have soared.
Previously, we conceived of the periphery as being close to major cities, but this is no longer accurate. The perimeter is no longer merely a boundary with the city, but is also determined by how long it takes to get there.
Investors are turning to real estate as a safe haven and a way to grow their wealth. Consequently, the investor must clearly define legally in order to decide on which project to invest in. The second step is to select a respectable investor, both financially and in terms of their capacity to implement the idea. The next step is to evaluate the project’s worth in comparison to similar ones already underway in the area.
Tran Thi Cam Tu - General director, Eximrs
There are two concepts for suburban real estate: suburban areas with administrative boundaries of big cities of Hanoi, Ho Chi Minh City and Danang; and we have a new concept adjacent to the mega-urban areas, although not on the same boundary. Those may be the mega-urban areas near resorts, large-scale real estate projects which have advantages in terms of facilities and utilities, and good infrastructure system.
When Ring Road 3, passing through the four localities of Ho Chi Minh, Dong Nai, Binh Duong and Long An is deployed, it will create a corridor connecting industrial zones, ports, and seaport clusters and reduce transportation costs as well as travel time.
Ring Road 3 will be a great development movement for the whole economic region. As a professional distributor of products in the provinces of Dong Nai, Binh Duong, Long An, and Vung Tau, I see that, wherever the road goes, the real estate will take off.
Only real estate projects that bring economic value will have real value. When Ring Road 3 is deployed, the properties on that route will surely develop well. This will be a high-potential market when the real estate in the core area has far exceeded the affordability of the majority of people.
In the coming time, investors should focus on projects that are suitable for investors’ capabilities, within a radius of 10km with existing residential areas, and facilities, having enough legal documents of construction and sale permits.
Do Quy Duy - Business director, Hai Phat Invest
Core area real estate, in my opinion, is divided into three types: core area, buffer zone, and suburban area. When the transport infrastructure develops and car ownership increases, I use the travel time to evaluate what is a suburban area and urban areas like Hanoi and Ho Chi Minh City – if travelling about 30 minutes it is a buffer zone, and 45 minutes is a suburban zone.
Not only any specific project, but big projects of reputable investors are well-known in the market. In fact, we are in a hard time doing business in the real estate sector. We have to admit that 2022 is a difficult year for the housing segment because the supply is not as good as in previous years. Given the very limited supply, I think the supply this year is much lower than two years ago.
That leads to the fact that the capital source in the market is forced to move because Vietnam is entering a period of very good economic growth and people are gradually getting used to the effective capital flow. However, specific investment channels and especially real estate in Vietnam remain on an upward trend.
Investment sentiment in Vietnam will still be very good in the near future and with the story of limited supply, investors with strong finance, good reputation, and high-quality client portfolios, 2022 is rather good for them.
Investors should choose a market with purchasing power from both local and migrant buyers with a high number of clients coming from Hanoi and Ho Chi Minh City, and projects with growth potential in the next 3-5 years.
Tran The Anh - Business director, Thang Loi Group
The suburban areas, especially the well-planned and developed projects all have low construction density, mainly creating a living environment and a series of internal green areas that promise to be more attractive and preferred by buyers and investors. In the long term, the suburb still has potential for growth because people’s need to store assets is still high. Especially with the construction of infrastructure projects that will promote development in these suburban areas.
Faced with the fact that the land fund in the inner city is increasingly exhausted and the prices are high, many investors have turned to invest in suburban real estate, which is inevitable in the context of the thirst for houses of the people who are living and working in cities.
The shifting trend of the project and individual investors to suburban areas is also creating a new vitality for the real estate market in the suburbs. In which, Long An has many advantages when it is located adjacent to Ho Chi Minh City, one of the economic hubs of the country. With the situation of crowded land and limited land funds, moving to the suburbs is inevitable. The infrastructure system improvement also promotes this trend to grow stronger.
Currently, many businesses also tend to move to the suburbs to place key projects, foreign businesses also choose large urban neighborhoods to develop warehouses and factories, pulling many workers to move here to live and work, and the demand for housing has also increased dramatically. Moreover, with the approval of infrastructure investment in key traffic works, especially in Hoc Mon and Cu Chi communities, which are being moved to the city, along with the strong development investment of infrastructure and push up the value of the real estate in the suburbs.
And in fact, other localities such as Binh Chanh and Duc Hoa communes are also going to be upgraded to cities very soon. Becoming a “City within a city” will open up many lucrative opportunities for investors in those communes. Therefore, for keen investors, the suburban area is still the promised land in the future.
Currently, the land funds for developing new projects in the suburban provinces are quite large, many places still have preferential policies to attract investment and importantly, the traffic infrastructure is currently improved. Based on these factors, it can be concluded that the suburban real estate market in 2022 will continue to develop further.