Switching to investing in houses in alleys amid the gloomy real estate market and difficult liquidity, the investment group of Mr. Nguyen Thanh Tung (39 years old, Cau Giay, Hanoi) started looking to buy houses and land in alleys since 2020 with the purpose of building new or renovating, then transferring them as soon as the expected profit is achieved or keeping them for rent for houses with rental potential and the ability to bring in good cash flow.
“After careful research and consideration, I decided to invest heavily in the alley house segment. Based on the Vietnamese mentality of “playing it safe and sound”, alley houses are landed properties, with prices comparable to those of apartments. Most people still prefer to own real estate, so I think investing in this type of property will not be out of date or depreciating in value,” said Mr. Tung.
According to the original plan, Mr. Tung bought plots of land in small alleys, or old, dilapidated houses, then built new ones or renovated them and sold them on the market.
Mr. Tung said: “Houses in alleys always have good liquidity, so the capital turnover is quite fast, bringing in cash flow for continued investment. From the time of buying land or an old house, then proceeding to build and renovate until selling it on the market, the capital turnover time is about 6 months, and can earn an average profit rate of about 20% of the investment value in 6 months. The houses with the best liquidity are houses in small alleys, priced at about 4-6 billion VND”.
“After a period of experience and realizing that this is a pretty good investment channel, when I needed capital to expand my investment, I invited my friends to contribute capital. Initially, my friends only invested in a few “nice” apartments. After a while, we discussed and decided to establish a company to manage them more systematically and professionally. After establishing the company, in addition to buying and selling, we kept some apartments with good rental potential, then designed them as rooms for rent, maintaining monthly cash flow,” Mr. Tung added.
According to the reporter of Lao Dong Newspaper, the price of houses in alleys in Cau Giay, Dong Da, Thanh Xuan, Bac Tu Liem districts (Hanoi) has continuously increased recently.
For example, a 5-storey house in lane 401 Xuan Dinh street, Bac Tu Liem district, Hanoi, owned by Mr. Nguyen Thanh Chung's family (38 years old, Tay Ho, Hanoi) at the end of 2023 for 4.8 billion VND, has now increased by about 1 billion, to nearly 6 billion VND.
Analyzing the reasons for the high price of houses in alleys, Mr. Nguyen Van Dinh - Chairman of the Vietnam Real Estate Brokers Association - said that the reason is partly due to the high price of apartments in the market, which has prompted a group of home buyers to change direction. Houses in alleys costing 3-4 billion VND are of great interest because with a similar budget, to buy an apartment, one must move to an area far from the center and are increasingly scarce.
Investment demand in this segment has also increased again. Mr. Dinh said that this segment has good liquidity with full legal documents, reasonable selling prices, and high rental yields in the context of abundant rental demand.
