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When the cost of capital rises, the real estate investment problem is no longer centered on short-term price appreciation expectations. For central-city apartments in tourist cities like Da Nang, the decisive factor increasingly lies in the ability to generate cash flow and maintain stable operating capacity in the long term.
Rising cost of capital is changing how investors view real estate. High cost of capital reflects not only bank loan rates but also the opportunity cost of cash flow. When typical deposit rates vary around 7–10% per year, any investment channel must demonstrate the ability to generate returns above this baseline.
This leads many investors to adopt a more cautious approach: instead of only looking at potential price appreciation in the future, they start evaluating the actual cash flow the asset can generate after financing costs.
Dat Xanh Services’ 2025 Housing Market Report and 2026 forecast indicate that more than 70% of home buyers require bank financing, with most borrowing 50–70%. This means the financial performance of a property is increasingly tied to its ability to generate cash flow after financing costs.
In that context, assets dependent entirely on price appreciation expectations tend to become less attractive. Conversely, real estate that can be tied to real operating activity—such as lodging, services, and long-term leasing—is viewed more favorably by professional investors.
For upscale apartment segments in tourist cities, rental yields are typically estimated at about 8–12% per year, depending on location, occupancy, and project operation standards. When combined with periodic asset price appreciation, this provides a basis for many investors to build medium-term profit scenarios.
The above numbers are illustrative based on recent premium condo market data, but they show how investors increasingly view real estate as a cash-flow generating asset rather than simply a price-appreciation tool.
Da Nang, with the advantage of being an international tourist destination, is converging to a model of “operating real estate.” The revival of tourism and the trend of high-end short-term lodging make properties that can be exploited as hotels a preferred choice.
In a selective market, investors’ focus is no longer on short-term price increases. The more important question is whether the asset can generate a stable cash flow to withstand the capital-cost cycle. At this point, apartments in the urban core with operating potential have a clear advantage over the rest of the market.
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