Vietnam property investors seek new opportunities in provincial markets

Real estate investors in Vietnam, both individuals and organizations, are shifting their investments from city centers to suburban regions and neighboring provinces where land remains abundant and significant investments are being made in infrastructure, particularly in transportation.

According to the Vietnam Association of Real Estate Brokers (VARS), the trend of moving away from city centers among real estate companies and individual investors reflects not only their search for new investment opportunities but also the influence of external factors such as urban planning policies, transportation infrastructure, and changes in buyer demand.

Firstly, property prices in central areas of major cities like Hanoi and Ho Chi Minh City have reached record levels, making investments more challenging as capital costs rise, while profit margins gradually decrease or become difficult to secure due to legal issues and long implementation timelines of projects in city centers.

This situation forces investors with limited financial resources to seek potential markets in the suburbs.

Secondly, the government and local authorities are intensifying the planning of satellite urban areas and expanding urban spaces to ease the pressure on population and infrastructure in city centers, making suburban districts and neighboring provinces attractive destinations for both individual investors and businesses.

Thirdly, investments in transportation infrastructure, including expressways, ring roads, and public transport systems like metro lines, shorten the travel time between satellite areas and city centers. This not only adds value to real estate but also attracts significant real estate demand.

Fourthly, the development of large-scale urban projects in suburban areas boosts infrastructure and commercial development while driving up property values in surrounding areas, drawing the attention of investors.

VARS stated that as prices in central areas rise sharply, individual investors are increasingly "accelerating" the flow of capital to areas where land prices are more affordable and growth potential is high. These investors typically focus on types such as land plots, commercial townhouses, or new urban projects with reasonable investment values.

Rather than focusing on short-term speculative trading, many investors are opting for a strategy of accumulating land in suburban areas, anticipating future development when infrastructure is completed.

In addition to residential properties, models like second homes, farmstays, or suburban resorts are attracting investor interest thanks to their rental potential, especially after the Covid-19 pandemic, which has fostered green living and remote working.

This trend also presents opportunities for real estate companies to develop projects of various scales. Many major developers have seized opportunities, developing large-scale urban areas in neighboring provinces.

Projects like Aqua City and Izumi City in the southern province of Dong Nai, Vinhomes Ocean Park in Hanoi, and Sun Urban City in the northern province of Ha Nam are proof of this shift.

An inevitable trend amid rising land costs

For medium and small-sized real estate companies, developing projects in suburban areas, satellite cities, or neighboring provinces has become not just an opportunity but almost a necessity.

This is particularly true as legal regulations on land, housing, and real estate business tighten, especially with rising land costs that make it difficult to compete and develop projects in city centers.

Recently, many firms have proactively sought and accumulated clean land in suburban areas to implement projects, taking advantage of lower land prices and high growth potential. This new supply is also a key factor driving the robust development of the suburban real estate market, meeting the growing demand for housing.

In addition to the housing segment, businesses are also increasing investments in industrial real estate due to rising demand from the global supply chain shift and support from planning schemes.

With the growing population in satellite urban areas, the demand for shopping centers, mixed-use complexes, and office spaces in suburban areas is also rising, creating opportunities for real estate companies to expand their investment portfolios.

VARS predicted that the trend of moving to areas outside city centers will become more defined. Property investment in central areas is now suitable mainly for financially strong investors with long-term asset accumulation needs.

Meanwhile, in some well-planned areas with developing infrastructure, property prices remain relatively "cheap" with substantial price increase potential in the future, especially as demand for housing in non-central areas continues to rise. Policies that encourage and incentivize the development of suburban urban areas will further motivate investors.

However, VARS advised investors to make thorough research and evaluations as legal issues related to planning, land use rights, and legal procedures may arise.

While the potential is significant, not all areas have enough appeal to ensure strong demand for real estate products, it said, adding some regions still lack public amenities, making it challenging to attract residents and investors.