Should I sell my Hanoi apartment to buy land in rural districts?

Question from reader Khanh Do:

In 2019, I bought a 65-square-meter apartment unit in a building in Hanoi for about VND2.6 billion (US$106,090). Recently, many similar units in the same building have been sold at VND3.3-3.4 billion.

My apartment is currently rented out for VND11 million per month and I am wondering whether I should sell this apartment to buy two plots of land in areas near Ring Road No.4, such as those in Soc Son District or Me Linh District.

Many people have advised me that the ongoing economic downturn is a good opportunity to buy land at a low price.

I hope experts and experienced readers can help me with my situation!

Advice from Pham Duc Toan, founder of real estate firm EZ Property:

In the past three years, apartment prices in Hanoi have been continuously increasing in both primary and secondary markets due to a severe shortage of housing units.

This has resulted in huge profits for most people who invested in apartments prior to the pandemic.

In your case, after more than four years, your apartment’s value has risen by 30%, which is a fairly decent profit margin given the current real estate investment market condition.

Furthermore, the apartment also generates a steady income of VND11 million per month, which amounts to about 4-5% of the apartment's value annually, not including management, repair, and maintenance costs.

In 2024, the apartment segment in Hanoi is forecasted to continue attracting buyers due to their liquidity and ability to either serve actual housing needs or generate rental income.

Therefore, the price of your apartment may increase by an additional 7-8% this year.

However, please note that after six years from project completion, the potential for value appreciation for apartments will plateau and gradually diminish over the years. From that point, rental yields will also decrease gradually.

Currently, your apartment has been rented out for four years, meaning it has probably been through its prime period.

If you wish to change your portfolio, I believe this year is a reasonable time to sell the apartment as the demand for apartments in the secondary market is still strong.

However, investing in land near the Ring Road No.4 is quite risky at the moment.

Although the land plots in rural districts such as Hoai Duc, Dan Phuong, Me Linh, Soc Son and Thuong Tin have seen discounts of 20-30%, this decrease in price is relatively low compared to the rate of increase during the 2020-21 period.

There is a chance to purchase properties here at good prices, but only if you have experience in market research and connections to brokers in this area.

Please note that the Ring Road No.4 is a road that passes through a lot of agricultural land, similar to a highway.

As it does not directly pass through urban areas, even with additional information about its construction or completion, it is difficult for real estate in the area to appreciate unless a new urban area is established along this route.

Furthermore, the construction of the road could be delayed for years.

If you want to invest in suburban land, you need to accept greater risks and a longer waiting period of at least two to three years.

During this period, you will not get any income from these land plots, unlike your apartment.

Therefore, cheap land may not necessarily be worth it if you cannot use it for living or business purposes.

If you still wish to invest in real estate, residential land within suburban residential areas is a good option to consider.

With your budget, you can invest in boarding houses, warehouses, or factories for lease depending on the plot’s location.

Having additional income streams also helps increase the value of the land you own.

Nonetheless, this option requires you to find land plots in good locations or densely populated areas with high demand.

The land must also have proper legal documentation and you must manage and maintain the leased property.

*The question and answer were translated into English by AI.