Northern real estate investors are bustling to move south.

Many real estate investors from the North have flocked to Saigon and the Southern provinces to seek real estate investment opportunities because the market's profit rate is attractive, prices are "soft" and liquidity is better.

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Joining the wave of real estate investment in the South quite early, from the beginning of 2000, Mr. Duc, who worked in the steel industry in Cau Giay district, Hanoi, gathered 50 gold bars that he had saved up and went to Saigon to hunt for 5,000 m2 of agricultural land in Phuoc Thien ward, district 9. If calculated according to the current gold price of 36.8 million VND per tael, the land is worth nearly 2 billion VND. At that time, the real estate market was still in its infancy, he completed the legal documents, built a 100 m2 house, and used the remaining land for a farm, planted ornamental flowers, fruit trees, dug ponds, raised geese, and chickens, and hired people to take care of them every month.

In 2014-2015, land prices in this area skyrocketed when investors bought land in the suburbs. Mr. Duc's land was offered at 10 billion VND and then 13 billion VND many times, but this investor still held on to it and did not sell it. "I have held this property for 16 years, intending to invest in my retirement. Over time, land prices will continue to increase, so I am not in a hurry to sell it," he said.

Moving to the South later, in 2013, Mr. Tuan, a resident of Hai Ba Trung District, Hanoi, sold his Lac Trung townhouse for VND12 billion and decided to move to Saigon to invest in real estate. Mr. Tuan used this money to buy four large plots of land in District 9, Ho Chi Minh City, covering nearly 2,000 square meters, and a luxury apartment in District 2 for rent. At that time, the land did not generate monthly cash flow, but the luxury apartment generated an average revenue of over USD10,000 per year. In 2014-2015, real estate in the East of Saigon was bustling thanks to highways, beltways, and metro lines, which helped his four plots of land increase in price sharply.

Many northern investors have shifted capital from Hanoi to Saigon to buy real estate because the rate of return in this market is higher. Photo: Lucas Nguyen

In June 2016, Mr. Tuan sold 3 plots of land for a profit, along with the cash flow from the apartment rented out for the past 2.5 years, earning him a capital of 12 billion VND. The remaining plot of land, nearly 500 square meters, has increased in price by one and a half times in the past 30 months, while the apartment is still rented out long-term. "This will be the net profit after 3 years of hunting for real estate investment opportunities in Saigon. I will only sell when the profit margin doubles," he said.

Originally from Hanoi, Mr. Trung, a Vietnamese expatriate in Germany, prioritized investing in the capital. However, after only a few years, seeing that the profit rate in the North was not as expected, he decided to move south. In 2012, this investor bought a house on Trung Hoa street worth 32 billion VND to rent out for 900 million VND a year. The lease contract was for 10 years, from the 3rd year onwards, the price increased by 6% each year. However, for the past 2 years, customers have asked to rent at the old price because business has not been favorable.

This investor calculated that if he sold the house, he could earn 37 billion VND, not including brokerage fees and transfer of documents and procedures. "The annual profit rate of the house is less than 5%, a very low number," Mr. Trung said, looking dissatisfied.

Therefore, in 2015-2016, he decided to change his investment direction, moving all capital to the South. The 15 billion VND he planned to buy a street-front townhouse in Hanoi was exchanged for 2 luxury apartments in the center of Ho Chi Minh City because the guaranteed profit rate is at least 7% and at most 8-9%, much higher than in Hanoi. "In the near future, I will buy more street-front townhouses in Saigon for rent," Mr. Trung revealed.

Facing the trend of Hanoi investors, in the first 3 quarters of 2016, many investors of famous projects in Ho Chi Minh City have organized massive sales openings in the capital. Big real estate giants in Ho Chi Minh City such as Khang Dien, Novaland, Phu My Hung, VinaCapital, CapitaLand... have all taken advantage of the Southern wave of Northern investors. The types of goods are quite diverse, from villas, townhouses to luxury apartments, even resort real estate have been massively offered for sale in Hanoi.

According to real estate experts in Ho Chi Minh City, through actual surveys, the real estate investment direction from Hanoi to Saigon is 100%, while the opposite direction from Saigon to Hanoi is only less than 5%. The areas of Thao Dien, Phu My Hung, Saigon Pearl, The Manor concentrate 15-40% of Hanoians or people from the North.

Mr. Nguyen Tho Tuyen, General Director of STDA Real Estate Project Supermarket System (Cengroup) said that the rate of return of the Hanoi market is usually 2-3% lower than that of Ho Chi Minh City. That could be the reason why many investors have changed direction recently. However, he also said that this trend is not new and appeared around 2008-2010, but then the real estate crisis was interrupted. Recently, many investors have returned to the market, so this trend has reappeared.

Mr. Tuyen also emphasized that not all areas in Ho Chi Minh City have good profit rates, but only concentrated in the city center, which can reach 8-9% per year. Therefore, he said, in addition to the purpose of settling down, many Hanoi investors also choose high-end real estate in the central area of ​​Ho Chi Minh City to buy and exploit for rent.

"Many FDI enterprises when investing in Vietnam choose Ho Chi Minh City as their first stop. Therefore, the demand for luxury apartments for foreign experts here is always higher than in Hanoi," said Mr. Tuyen.

Besides, according to him, the real estate market in Ho Chi Minh City is always more vibrant than in Hanoi, investors feel that it is easy to buy, easy to sell, easy to rent. That is also the reason to attract customers from the North.

According to VNE