Understand the future of Viet Nam’s real estate landscape through Savills H1/2024 Market Outlook. As we progress through the first half of the year, amidst moderated real estate metrics, there’s a discernible anticipation fueled by infrastructure developments and evolving policies. These factors pose challenges while also presenting significant opportunities.

MACRO OVERVIEW

During the first half of 2024, Viet Nam's economy showcased robust performance with GDP growth reaching 6.4%, marking its second-highest since 2020, slightly below the peak of 6.6% recorded in the first half of 2022. The Consumer Price Index (CPI) rose by 4% year-on-year (YoY), while core inflation remained steady at 2.8%.

Retail sales of goods and services continued to expand, achieving an estimated revenue of US$124 billion with real growth of 6% YoY. Total import and export values surged by 16% YoY to US$369 billion, driven by a 15% increase in exports and a 17% rise in imports, resulting in a trade surplus of US$12 billion.

Foreign Direct Investment (FDI) grew by 13% YoY to US$15 billion, with Viet Nam granting investment certificates to 1,538 new projects totalling US$9.5 billion—a significant increase of 19% in project numbers and 47% in value YoY. International visitors to Viet Nam surpassed 8.8 million, up 4.1% YoY and exceeding pre-COVID-19 levels in H1/2019 by 3%.

Savills Market Brief H1/2024 provides a detailed outlook on the residential, commercial, and hospitality sectors in Ha Noi and Ho Chi Minh City, helping investors and stakeholders make informed decisions.

Download Savills Market Brief H1/2024 for insights into Viet Nam’s property sector.

RESIDENTIAL REAL ESTATE OVERVIEW

Apartment

In Q2/2024, new supply decreased sharply as ongoing projects were completed, impacting primary stock. Despite a dip in sales, Grade B properties remained dominant, with prices continuing to climb. The secondary market thrived on affordability and availability. Ha Noi’s infrastructure projects are set to drive real estate demand, promising future growth and affordable housing options in suburban areas.

Ho Chi Minh City Apartment Performance

Ho Chi Minh City’s real estate market saw a notable increase in new supply during the second quarter, particularly in Grade B properties, while primary stock showed stability with a focus on Thu Duc City and western districts. Sales surged significantly, reflecting renewed market confidence driven by favourable lending rates and developer incentives. Despite stable primary prices overall, affordable housing options under VND 3 billion remained scarce, prompting a shift towards satellite provinces like Binh Duong and Dong Nai for future supply.

Primary supply remains constrained, however is showing green shoots. The implementation of revised laws, city planning, and key infrastructure delivery is welcome.

Troy Griffiths, Deputy Managing Director, Savills Viet Nam

Outlook: In H2/2024, Ha Noi anticipates the addition of 13,460 Grade B units from eight new launches and two project expansions, with Nam Tu Liem, Ha Dong, and Gia Lam leading with a 93% share. Looking ahead, approximately 100,000 units across 105 projects are slated for development from 2025 onward, featuring major projects like Vinhomes Co Loa, North Ha Noi Smart City, and Vinhomes Wonder Park contributing 40% of the future supply. In Ho Chi Minh City, Thu Duc City is expected to dominate with a 52% share of upcoming launches, followed by District 7 (12%) and Binh Tan (8%).

Villa/Townhouse

In Q2/2024, Ha Noi saw a rise in new dwellings with 128 units, marking a 38% increase QoQ but a slight 2% decline YoY. Major contributors included An Quy Villa and Solasta Mansion in Ha Dong, and An Lac Green Symphony in Hoai Duc, along with Him Lam Thuong Tin in Thuong Tin. Primary stock decreased by 9% QoQ and 24% YoY to 608 dwellings across 16 projects, primarily dominated by villas accounting for 39% of the stock. Sales declined by 40% QoQ but increased by 5% YoY to 111 dwellings, with slow absorption rates and Ha Dong leading primary transactions at 61%. Villa prices rose by 9% QoQ to VND 178 million/m2 LA, while townhouse prices fell by 2% QoQ and shophouse prices increased by 3% QoQ.

Ho Chi Minh City faced minimal new supply due to land scarcity and developer caution in the second quarter, with only The Sholi Binh Tan adding 10 shophouses, a significant decline of 75% QoQ and 97% YoY. Primary stock decreased by 12% QoQ and 33% YoY to 668 dwellings, dominated by products priced over VND 30 billion, primarily located in Thu Duc City. Sales slowed with 72 transactions, dropping 36% QoQ and YoY, affected by high prices, competition from secondary markets, and affordability challenges. Expensive shophouses at The Global City saw prices decrease by 2% QoQ and 4% YoY to VND 320 billion/m2 LA.

Rising prices in Ho Chi Minh City drove end-users to seek affordable options in neighbouring provinces like Binh Duong and Dong Nai, where more competitive pricing is anticipated in the coming years.

Commercial Real Estate Overview

Office

Ha Noi's office market maintained stability in Q2/2024 with 2.13 million m² NLA. Grade A rents rose to VND 876,000/m²/month, while Grade B showed minor fluctuations.

Occupancy rates improved across all grades, notably reaching 89% for Grade A. Future developments in Tay Ho Tay NUA and the upcoming Metro line 3.1 are expected to influence market dynamics significantly.

The scarcity in the Hoan Kiem Area boosted rents, while Midtown and The West remain competitive for decentralisation.  

Hoang Nguyet Minh, Senior Director, Commercial Leasing Savills Ha Noi 

The Grade A-Suburban office segment in Ho Chi Minh City showed robust performance in Q2/2024. Rents increased to VND 815,000/m²/month (up 2% QoQ, 8% YoY) with occupancy rising to 84%. The market continues to attract strong interest from foreign and local sectors, driven by upcoming Grade B and C projects and positive economic growth indicators.

Figure: Ho Chi Minh City Office Performance H1/2024

Outlook: Ha Noi plans to add 480,723 m² of office space by 2026, primarily focusing on Grade A developments in the West and Tay Ho Tay NUA. Notable projects include BRG Diamond Park Plaza and Taisei Square Ha Noi. Meanwhile, Ho Chi Minh City anticipates over 179,949 m² of new supply by 2026, emphasizing sustainable Grade A and B developments. Economic growth and a steady influx of new businesses are expected to sustain office market demand in both cities.

Retail

Ha Noi saw rents rise by 5% QoQ and 15% YoY, reaching VND 2.0 million/m²/month for department stores and VND 1.3 million/m²/month for shopping centres, with CBD rents hitting VND 3.4 million/m²/month. F&B saw expansions like Pizza 4P’s and upcoming venues like Mak Mak Thai Kitchen and Manwah Taiwanese Hotpot. Major centres increased leasing space, boosting opportunities.

In Ho Chi Minh City, Vincom Mega Mall Grand Park expanded to nearly 1.5 million m², up 2% QoQ. Future projects will add 188,000 m² by 2026, mostly outside the CBD. Retail sales rose 10% YoY to VND 557 trillion in H1/2024, driven by brands like Muji and Uniqlo.

The continued strength of the domestic economy is hastening the retail evolution, allowing expansion and entry of brands.

Cao Thi Thanh Huong, Senior Research Manager, Savills HCMC 

Outlook: Ha Noi plans to add 288,795 m² by 2026 from six shopping centres and 11 retail podiums. Ho Chi Minh City aims for a 50% market share by 2025, supported by an 8.4% increase in consumer spending.

Download Savills Market Report for more information

Hospitality Real Estate Market Report H1/2024

8.8 million

International visitors H1/2024

US$15bn

Registered FDI in VN in H1/2024

VND 190 trillion

Forecast tourism revenue in HCMC in 2024

Hotel

The hotel industry sustained its growth trajectory. Tourism metrics improved, heading towards the year's target.

Troy Griffiths, Deputy Managing Director, Savills Viet Nam

Ha Noi's hotel market saw stability in Q2/2024 with 11,120 rooms across 67 projects. Notably, the five-star segment increased by 3% QoQ, while the four-star segment decreased by 7% QoQ due to the rebranding of Movenpick Living West from a four-star to a five-star grade. Occupancy reached 67%, rising 2 ppts QoQ and 3 ppts YoY, while the average room rate declined by 7% QoQ but rose by 11% YoY. Five-star and four-star segments contributed to these trends with a 6% decline QoQ and a 9% increase YoY, respectively.

Figure: Ha Noi Hotel Performance H1/2024

Despite challenges from abundant stock and competition, Ho Chi Minh City's market has shown a gradual post-pandemic recovery, driven by increased domestic visitors. However, international arrivals remain 36% lower than pre-Covid levels, leading to a decline in occupancy to 63% in H1/2024. Q2/2024 saw occupancy drop further to 60%, with average room rates decreasing by 5% QoQ to VND 1.9 million/room/night. Annual demand rose, fueled by a 38% YoY increase in international visitors and a 4% rise in domestic visitors, resulting in a 4% increase in leased rooms. Despite new projects lowering occupancy by 1 ppt YoY, average room rates rose by 2% YoY, supported by high ARRs from new and renovated projects.

Figure: Ho Chi Minh City Hotel Performance H1/2024

Outlook: Ha Noi expects growth with a new five-star project adding 207 rooms in 2024, followed by 2,689 rooms across 12 projects by 2026. Meanwhile, Ho Chi Minh City anticipates gradual recovery with limited new developments and focuses on domestic tourism amidst slow international recovery.

Serviced Apartment

Sound FDI and infrastructure improvement continued to prompt demand for serviced apartments, as travelling time to neighbouring provinces is shortened.

Matthew Powell, Director, Savills Ha Noi

In Ha Noi, two-bedroom units are popular in CBD and other areas, while the West prefers smaller units like studios and one-bedroom units.

Future developments include 5,909 units across 17 projects starting in 2024. Notable openings include PARKROYAL Serviced Suites Ha Noi and Epic Tower, with branded operators taking a 55% share of the upcoming supply.

Target tenants for serviced apartments in Ho Chi Minh City include expats from industrial parks and foreign businesses in Long An, Dong Nai, and Binh Duong. Most projects offer both long and short-term rentals to maximize occupancy, with studio and one-bedroom units being the preferred choices, comprising 85% of the new supply. Despite stable demand from corporate long-stay users, challenges loom with slowing FDI inflows and increasing competition from other rental options.

Download Savills Market Brief for more information