Explore Q1/2024 real estate performance in Ha Noi and Ho Chi Minh City with Savills quarterly market report.

This real estate market report explores how strong fundamentals and unmet demand will support residential performance once supply restraints are removed, the sectors driving demand for green offices, brands fuelling retail expansion, and the factors with the greatest influence on affordable housing. Savills property experts unpack how hospitality in Viet Nam is recovering compared to the rest of the region and how FDI is driving demand for serviced apartments.

Savills Market Report Q1/2024 offers a comprehensive view of residential, commercial, hospitality landscapes in Ha Noi and Ho Chi Minh City, guiding investors and property stakeholders toward informed decisions.

MACRO OVERVIEW

According to the General Statistics Office of Viet Nam (GSO), GDP growth in Q1/2024 was 5.7%, higher than Q1 growth between 2020 and 2023. CPI grew 3.8% YoY and core inflation was 2.8%.

Foreign direct investment (FDI) in Viet Nam rose by 13% YoY to US$6.2 billion, including newly registered, additional, and M&A capital. Viet Nam granted investment certificates to 644 new projects with a total registered capital of US$4.8 billion. This marks a notable increase of 23% in the number of projects and 58% in value YoY.

Download Savills Real estate market report Q1/2024 for insights into Viet Nam’s property sector.

Residential Real Estate Overview

Apartment

Ha Noi Apartment Performance

In Ha Noi, primary supply of 12,928 units increased by 9% QoQ but dropped by 34% YoY. There were 5,308 sales, increasing by 74% QoQ and 99% YoY.

The secondary housing market remains of interest in Ha Noi given increasing primary prices, reduced primary stock, and completed products with full legal status.

In general terms, the market continues to improve. However, there is a heavy stock bias of Grade B apartments. Key infrastructure projects could well deliver more affordable mass market product.

Do Thu Hang, Senior Director, Advisory Services, Savills Ha Noi

Ho Chi Minh City Apartment Performance

In Ho Chi Minh City, primary apartment stock fell by 35% QoQ and 28% YoY to 4,922 units after nine projects temporarily halted sales due to incomplete legal requirements or sale policy adjustments. Sales of 1,116 units fell by 63% QoQ but rose by 29% YoY. Given weakened sales, a two-year extended payment plan, 0% interest and grace periods were offered by most developers. A preferential mortgage rate for up to 15 years appeared for the first time at Vinhomes Grand Park.

Despite ongoing challenges, strong fundamentals and unmet demand are expected to support market rebound once supply constraints are lifted and confidence improves.

Troy Griffiths, Deputy Managing Director, Savills Viet Nam

Villa/Townhouse

Stock in the villa/townhouse (VLTH) segment across Viet Nam remained chronically low.

In Ha Noi, primary villa/townhouse stock of 665 dwellings came from 16 projects, decreasing by 6% QoQ and 12% YoY as one project in Dong Anh was recalled by the city. Unlike Q4/2023 with a decrease in sales, performance in Q1/2024 surged by 189% QoQ and 110% YoY with 185 dwelling sales. As such, Q1/2024 sales in Ha Noi was equal to 52%of the entire sales volume in 2023. Additionally, 63% of newly launched properties were absorbed.

Although primary villa/townhouse stock in Ho Chi Minh City has been constrained for more than three years because of legal obstacles limiting new projects, primary stock reached 762 dwellings, stable QoQ but improving by 13% YoY. Like in Ha Noi, sales improved 72% QoQ and 143% YoY to 112 dwellings. Absorption increased by 6 ppts QoQ and 8 ppts YoY to 15%. However, despite improvements, performance remains modest.

Supply remains low. All metrics are fragile off a low base. There is considerable opportunity for fresh launches at the right prices.

Matthew Powell, Director, Savills Ha Noi

Commercial Real Estate Overview

Office

Ha Noi Office Performance

Office stock in Ha Noi was stable QoQ at 2,130,000 m² NLA in Q1/2024 and softened by 2% YoY. Given movement is reflecting a ‘flight to quality’, several landlords, particularly in the Grade B segment implemented rent discounts to retain tenants. As such, gross rent of VND 516,000/m²/month fell by 1% QoQ and 2% YoY. Occupancy remained high at 87%.

Ho Chi Minh Office Performance

In Ho Chi Minh City, office stock rose by 1% QoQ and 6% YoY with a little over 2,700,000 m² NLA. Unlike Ha Noi, office gross rent in Ho Chi Minh City improved to VND 799,000/m²/month. However, occupancy dipped slightly YoY to 90%.

Across Viet Nam’s office markets, ICT, FIRE, and manufacturing tenants continue to be significant office occupiers. Across Ha Noi and Ho Chi Minh City, relocation remains a significant driver of office demand.

Retail

Ha Noi Retail Performance

In Ha Noi, retail rent of VND 1,200,000/m²/month increased by 2% QoQ and 13% YoY, and retail occupancy in Ha Noi dipped slightly YoY to 88%.

Ho Chi Minh City Retail Performance

Ho Chi Minh City gross ground floor rent was VND 1,300,000/m²/month stable QoQ and rising 4% YoY. Occupancy was stable QoQ at 92%.

Hospitality Real Estate Market Report Q1/2024

Hotel

In Q1/2024, the number of international visitors to Viet Nam reached 4.6 million, improving YoY but also compared to the Q1/2019 base. Asian source markets continue to drive performance international tourism arrivals in Viet Nam; South Korean tourists increased by 150% YoY, and there were also increases in Chinese arrivals. Other notable source markets include Japan, Malaysia, Australia, Thailand, Cambodia, India, and the United States. However, hospitality recovery in Viet Nam is ongoing and still has not fully reached the 2019 base.

Although there is room for improvement, city markets like Ha Noi and Ho Chi Minh City are performing better than coastal cities like Nha Trang and Phu Quoc. In Ha Noi, hotel occupancy in Q1/2024 averaged 65%, up from 60% in Q4/2023. ARR increased by 2% QoQ and 11% YoY with resumed operations at Movenpick.

In Ho Chi Minh City, hotel occupancy in Q1/2024 was 66%. ARR at VND 2,100,000/room/night increased by 9% YoY, driven by upward trends across all grades.

Serviced Apartment

Performance in the sector remains robust. FDI inflows and expats drive serviced apartment performance in Ha Noi and Ho Chi Minh City. Expats returning, positive FDI inflows from major projects and improving infrastructure will auger well for future demand.