Update: 11:30:19 20-07-2018Date Submitted : 14:13:46 29-06-2018
First of all, why district 2?
District 2 is one of the most sought after residential areas among the expatriate community and affluent local citizen. It is surrounded by the Saigon River, and marked with the Ha Noi highway (metro line 1 completing in 2020 will run along the highway). The neighborhood is filled with trendy cafes, retail malls, restaurants, grocery shops, bakeries, international schools, medical and dental clinics. The surrounding green environment is highly livable and attractive to affluent Vietnamese and foreigners, and the area is dominated by many luxurious villas.
At the moments, district 2 is the "hot spot" of high-end residential developments, especially Thao Dien and An Phu ward, where the very first metro line in Vietnam - Metro Line No.1 will go through. The estimated number of mid-end and high-end residential apartments to be launched to the market till 2020 will be approximately over 60,000.
Looking into the real estate market in Ho Chi Minh city, in quarter 2 & 3 of 2017, there will be more than 10,000 apartments launched, focusing on 3 key areas of district 2:
2. Thanh My Loi.
3. Thu thiem new urban area.
4. Thao Dien & An Phu ward - The most sought after expats community.
This is the area with the highest density of construction, and the most upgraded traffic infrastructure as well as the most developed residential community with the best amenities such as international schools, international hospital, fancy restaurants & bars, entertainment and commercial centers, etc. And this is one of the very few areas where the metro line No. 1 will go through - The first metro line of Vietnam to be completed in 2020, as mentioned.
In the face of oversupply of apartments in Ho Chi Minh city from low-end, mid-end to high-end segment, buyers, especially foreigners will have some certain hesitation before making any decision to buy. I hope the below information will be able to help you make a right decision on your investment in Vietnam.
The average price of those projects ranges from VND2,000 to USD3,500 per square meter.
Thanh My Loi area is approximately USD500/sqm cheaper than Thu Thiem new urban area.
2. Buy to invest:
With the current market oversupplied, the competition in renting segment is quite extreme. It is doubtful that every apartment will be easily rented out when completed.
Some suggested projects with acceptable/good rental yield: Estella Heights (Keppel Land), Gateway Thao Dien (SonkimLand), Masteri An Phu (Thao Dien Investment), Q2 Thao Dien (Frasers Property), The Ascent in Thao Dien (Tien Phat Corp).
Estella Heights by Keppel Land
Masteri An Phu by Thao Dien Investment
Q2 Thao Dien (Glenwood Maison) by Frasers Property
The Ascent by Tien Phat Corp.
For the purpose of renting out your apartment, good living environment as well as the convenience in terms of traffic should be highly prioritized. It is very important to carefully consider the essential facilities inside and outside the developments as well, and also the important factors such as metro stations, big main roads, short distance to CBD, river bank with water bus, and so on.
Management company is another important thing to consider. Choose the projects managed by international companies such as Ascott, Savills, CBRE. Those are the names trusted by most foreign tenants.
Frankly speaking, at the moment this market is not very suitable for resales in short term. It is quite hard to find projects with capital appreciation that can reach your expectation. You might be able to find some, but do not set a high expectation. There are too many people wanting to do the same thing out there.
Besides, some foreign developers set some restriction in terms & conditions that resales is only possible after SPA is signed (Sales & Purchase Agreement), which leads to low capital appreciation within a 6-month period.
The advice for you is that resales market will look better in the beginning of 2018.
Nam Rach Chiec, Thanh My Loi, and Thu Thiem are the best areas for this purpose of investment.
There are 3 main factors to be considered with the long-term investment purpose:
Potential and speed of formation of the area
Thanh My Loi is considered to be a newly-formed administrative center of district 2, but because the connection between Mai Chi Tho street and Dong Van Cong street, which are the two main streets of the area, is not completely convenient so in term of traffic infrastructure this area is still not as developed as it is expected. However, at the moment, the riverside route connecting Thanh My Loi with Mai Chi Tho street and a new link bridge over the Small river are being finished up (The kick-off time is in quarter 2/2017). When these infrastructures are done, the property value in this area will significantly increase thanks to the traffic convenience.
***The project with the highest potential is Diamond Island developed by Kusto Group (Kazakhstan). Thanks to its unique location in the middle of the only natural island of Ho Chi Minh city, surrounded by rivers with fantastic obstructed views and an exceptional green living environment with the lowest construction ratio: 13%
Soon there will be a smart bridge crossing the park and connecting Diamond Island with the city center, significantly shortening the time to get to CBD. (Within 10 minutes)
Diamond Island in the middle of nature
How about Thu Thiem new urban area?
Not like Thao Dien where the surrounding facilities and community already exists, a place filled with fancy restaurants, bars & cafe, and other commercial and entertainment centers, as well as highly-upgraded infrastructure, Thu Thiem needs more time to fully develop. You will have to wait for at least several years from now to see the changes in area.
If you are planning for a long-term investment, Thu Thiem should be on the top of your list. This area will be the new face of the city, a second version of district 1, a new district so-called "district 1.2", or "Pudong" of Ho Chi Minh. This area is also nicely surrounded by Saigon river and located right next to district 1, just across the river.
Thu Thiem began to gradually develop in 1996 and is expected to become one of the most beautiful cities in South East Asia in the future. With the start of an impressive amount of construction mainly focused on traffic infrastructure (Thu Thiem tunnel, Thu Thiem bridges, etc.) making it super easy to access other parts of the city, and residential developments such as Empire City, Sala Dai Quang Minh, etc. Thu Thiem is now becoming the biggest hub of high-rise buildings, attracting an enormous amount of Foreign Direct Investment.
***Empire City has been the most desirable project in this area. The first two towers of the project were sold out completely within a short period of time. At the moment, many foreign investors are looking forward to buying in the next phase - Tower 3 - with the launching time expected to be in the 1st quarter of 2018.
Empire City by Keppel Land
Nam Rach Chiec area has been developed with the Ho Chi Minh-Long Thanh-Dau Giayfreeway which has already been in use, and the high-speed parallel route currently under construction. Estimated time of completion is in quarter 2 of 2018.
***The most remarkable project is Palm City (Keppel Land) with reasonable selling price.
Palm Heights by Keppel Land
Good financial leverages
There are quite a lot of projects which are financed by banks, 2-year loan without interest for local buyers. (Diamond Island, Feliz En Vista, etc.). This can be great if the banks are able to help secure or maximize your return on investment.
For buyers who have the purpose of assets accumulation when purchase, to be safe your investment should be 50% financed with the interest staying below 10%.
However, at the moment, the mortgage is not readily available for foreigners whom aren’t earning income in Vietnam. That being said, the interest rate at 11% also makes it less attractive so I would recommend if you are looking for lending options, to check in your home country for lending solutions.
Good rental yield
Apartments are the type of property that can be easily rented out. However, due to the huge supply in the current market, rental yield can only be good if the products supplied are outstanding. It will be best if there is some added value coming along with the products such as upgraded traffic infrastructure, facilities inside and outside the projects, exclusive gated community, etc.
Besides, if your apartment is easily rented out, it means the apartment is also easy to resell, with a satisfactory capital appreciation in short term.
If your budget is from USD100,000 to USD250,000, what should you go for?
There are quite a lot of choices in district 2 with this amount of investment. You can buy:
In short, my advise is that you should choose Thao Dien - An Phu area with the metro line for better rental yield and capital gain in short term, and go for Thu Thiem if you look for something great in long term.
Leave me some texts if you want to get detailed information about the projects I've mentioned above, or if you want to discuss more about the property market in Vietnam, I am up for some conversations over a coffee. :)
Thank you for reading, I hope you have a great day!
Reach me at: +84903858043 or email@example.com
Update: 11:32:18 20-07-2018
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