What Investors Need to Know Before Buying

On 16 June 2022, the National Assembly passed a resolution to start building Ring Road 4. According to the statement, the first phase will receive an investment of VND 85.8 trillion and will run through Ha Noi, Hung Yen and Bac Ninh provinces. Construction is scheduled to start in 2022, and it is expected to be operational in 2027. It will reduce the traffic pressure in the inner city, improve regional connectivity, and will link industrial zones, urban areas, provinces and other cities in the North, one of Viet Nam’s leading trade regions. The road is expected to boost production and business in the area.

Ring Road 4 will also unlock investment and development potential in the areas surrounding the road. Ms Do Thu Hang, Senior Director, Advisory Services, Savills Ha Noi, noted that real estate, especially residential property, is a good investment but investors need to acknowledge that there are risks when using infrastructure as a marker for investment.

Three Essential Steps to Investing in Real Estate

Step One: Evaluate the Market

Investors need to evaluate the market carefully before buying real estate. They must look at the current prices and compare these with the prices over the last few years. They also need to look at the progress of infrastructure development.

By comparing the current and past prices, investors can understand the potential capital gains and how this compares to other properties on the market.

Infrastructure development is also a good benchmark to measure property prices because infrastructure and urban utilities often affect the value of real estate. Infrastructure is beneficial because it reduces traffic congestion, supports trade, and often has a positive influence on socio-economic development. As such, infrastructure and real estate development often have a symbiotic connection.

Ms Hang commented: “Traffic infrastructure projects take several years and are broken into phases, including approval, land clearance, and pre-construction. Investors must understand the status and progress of the various phases. Real estate prices in areas with upcoming infrastructure are likely to increase. However, because these projects are broken up into phases across different areas, these changes will not occur uniformly. By understanding the real progress of surrounding infrastructure, investors can access the real returns they are likely to receive.”

Step Two: Understand Legality

Legality is another factor that investors should pay special attention to. Properties with a clear legal standing protect investors and reduce risks. Legal transparency is also likely to increase liquidity, making it easier for the investors to transfer, lease or resell. On the other hand, projects that do not guarantee legality present greater risks such as transfer disputes. Therefore, understanding the legal status of a project is essential.

Step Three: Create an Investment Roadmap

Ms Hang emphasised the need for a clear investment roadmap. She noted that investors should research the market and find products from experienced real estate developers, in areas with good infrastructure. Ultimately, this process is crucial to liquidity in the long term.

Experienced developers also know what customers are looking for and deliver comprehensive and diverse services and modern facilities. These indicate quality and improve living experiences, which also give investors a competitive advantage when it comes to leasing the property or selling it in the future.

“Trade between Viet Nam and other countries is becoming more vibrant, which means foreign investors are increasingly interested in Viet Nam. These customers not only need to understand the market but should employ a trusted property advisor to ensure smooth market entry and maximise their potential returns.” Ms Do Thu Hang commented.

Conclusion

Savills Advisory Services is the team of choice for many international investors. Our team allows investors to make informed decisions, thanks to their rich database and the use of cutting-edge analysis. Contact Ms Hang and her team here.

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