While apartment prices in Ho Chi Minh City decreased by 2% over the past year, prices in Hanoi surged by nearly 15%, making it an attractive investment market for businesses from the southern region.
During a press conference on January 9th, Vo Huynh Tuan Kiet, the Director of the Housing Development Department at CBRE Vietnam, stated that after the pandemic, the price increase trend for apartments in Hanoi has been maintained at around 14% annually. In 2023 alone, the average primary selling price in Hanoi increased by nearly 15% annually, reaching 53 million VND per square meter. This is comparable to the average price in Ho Chi Minh City during the 2020-2021 period.
In contrast, primary prices in Ho Chi Minh City have stabilized at over 60 million VND per square meter, experiencing a 2% decrease compared to 2022.
On the secondary market, apartment prices in Hanoi continue to rise quarterly, while prices in Ho Chi Minh City decreased throughout 2023. In the fourth quarter of 2023, Hanoi apartment prices increased by 5% annually, averaging 33 million VND per square meter.
Kiet explained that limited supply and high prices of new projects have driven the active secondary market. Conversely, in Ho Chi Minh City, the average price of secondary sales is 45 million VND per square meter, representing a 5% decrease from 2022. This reduction is concentrated in the high-end segment located farther from the city center with inconvenient connections.
The new apartment supply in both cities is concentrated in suburban areas. In particular, the western and eastern suburbs of Hanoi contribute over 60% to the new housing supply, while the eastern part of Ho Chi Minh City leads with nearly 80% of the new stock.
The overall price increase potential in Hanoi and the northern region has fueled the northward trend of real estate businesses from the southern region and foreign developers in the past two years, according to experts.
For example, at the end of last year, CapitaLand Development (CLD) acquired part of Vinhomes Smart City and announced the high-end Lumi Hanoi project with a total development value of around 18 trillion VND. In the eastern part of Hanoi, Mitsubishi Corporation (MC) collaborated with Vinhomes in The Metropolitan area after jointly developing two zones in Vinhomes Grand Park, Ho Chi Minh City.
In addition, major players pushing the northward trend include Keppel Land – Phu Long with the Mailand Hanoi City project, Phu My Hung with the Hong Hac City project in Bac Ninh, and Nam Long with the Nam Long Hai Phong project.
Explaining this trend, Nguyen Hoai An, Branch Director in Hanoi at CBRE Vietnam, mentioned that in recent years, the Hanoi market and its suburbs have been “dominated” by a few big names, lacking diversity in development brands compared to Ho Chi Minh City. In recent years, the advantages of this market have increased significantly due to the rapid development of transportation infrastructure and population scale. Beltways, bridges, and road expansions have promoted connectivity, creating potential for land development in suburban areas. With this abundant potential, many large investors who have developed in the southern region are now ambitious to expand northward.
Vo Huynh Tuan Kiet also pointed out that the Hanoi market, especially the apartment segment, has developed at a slower pace than Ho Chi Minh City by about 3-5 years. Foreign investors entering Vietnam have prioritized Ho Chi Minh City, leading to its early development in terms of product quality, policies, sales methods, and investment mindset. However, due to rapid and early development, land reserves in Ho Chi Minh City have become increasingly scarce, and prices have risen to a level that is high compared to the affordability of many people.
CBRE experts assess that the strong northward trend of foreign and southern investors will help reshape the apartment market in terms of product quality, management standards, and amenities.
“The disparity in development between Hanoi and Ho Chi Minh City apartments has diminished from a range of 3-5 years to just 1-2 years, and could potentially be on par in the foreseeable future.” Vo Huynh Tuan Kiet concluded.
