Emerging trends in Vietnam's real estate market

Analysts from Indochina Strategic, the real estate advisory arm of Indochina Capital (ICC), offer an insight into 10 emerging trends shaping Vietnam’s real estate M&A market in 2025.

Vietnam’s ambitious GDP growth target of 8.3-8.5% in 2025 is expected to generate strong momentum for emerging sectors such as the green economy, digital economy, and digital transformation, including mergers and acquisitions (M&A).

Rapid economic expansion typically accelerates corporate investment, diversification, and market consolidation. As domestic firms look to scale operations and foreign investors seek faster market entry, M&A becomes a natural channel to achieve growth.

According to the General Statistics Office, in the first eight months of 2025, total registered FDI into Vietnam reached $26.14 billion, up more than 27.3% year-on-year. Within this, capital contributions and share purchases in manufacturing accounted for 37% of total FDI, at nearly $1.7 billion.

In addition, high growth projections suggest improving consumer demand, rising capital inflows, and stronger confidence in Vietnam’s long-term prospects. This environment encourages companies to pursue M&A not only to expand market share but also to gain strategic advantages - such as acquiring modern technologies, entering high-potential sectors, and securing supply chain resilience.

Key drivers include favorable macroeconomic conditions that have improved market absorption capacity and the new Land Law, effective since August 2024, which has enhanced transparency and created momentum for growth.

In August alone, there were 18 transactions with a total value of nearly $2.23 billion. The leading sectors in terms of M&A value in Vietnam included industrial, technology, real estate, and financial services.

Strategic M&A transactions continued to dominate in number, while total deal value during the month was mainly driven by corporate restructuring transactions (78%). Domestic investors held the majority in terms of deal count, while international investors led in large-scale transactions.

This distribution reflects the distinct strengths of each group: local investors are adept at navigating legal frameworks, securing land, and leveraging local networks, whereas foreign investors typically target projects of sufficient scale with transparent legal standing and long-term growth potential.

Ten trends shaping Vietnam's real estate market in 2025

Trend No. 1: Lower rates, higher dealflow

By August 2025, Vietnam’s real estate credit showed signs of recovery, supported by improved market conditions and government measures, though challenges remained with large bond maturities and high developer costs.

The State Bank of Vietnam raised its credit growth target to stimulate the economy, with lending focused on priority sectors such as affordable housing. Banks have also worked to lower lending rates - currently in the 7-9% range - and improve credit quality, easing financing conditions for both borrowers and investors.

Over the past two years, most new credit disbursement has flowed to project developers, signaling potential new supply ahead. This channel has been critical for funding acquisitions of distressed projects, portfolio restructuring, or project rollouts following M&A.

For buyers, stronger access to credit enables them to target land banks with clear legal status but limited capital or to acquire equity stakes in existing projects. Conversely, many developers unable to secure financing - often due to legal bottlenecks - have turned to M&A as an indirect capital-raising solution.

Robust credit growth is seen as a catalyst for market restructuring, empowering financially capable developers to lead consolidation and drive more selective, higher-quality investment. Foreign investment has also rebounded strongly in H1/2025, further reinforcing confidence in Vietnam’s real estate market.

Regionally, transaction volumes remain pressured by global financing conditions. Since mid-2022, the Fed’s aggressive hiking cycle - lifting rates to a peak of 5.5% - has made underwriting deals more difficult, as sellers resisted lowering prices. Against this backdrop, Vietnam’s relative macro stability, credit growth, and improving access to capital stand out as supportive drivers for renewed M&A activity.

Trend No. 2: Banks driving asset repricing as downward pressure on rates narrows margins

Across the Asia-Pacific region, where commercial real estate financing depends heavily on local banks, lenders are now exerting stronger pressure on asset owners as they work to clean up their loan books after more than two years of stress.

Unlike in the past - when banks were cautious not to trigger defaults by forcing price adjustments - institutions today are increasingly requiring asset repricing at refinancing, reducing leverage levels, raising the cost of capital, and, in many cases, demanding borrowers inject additional equity.

The result is that asset owners now face greater incentive to lower asking prices, either because they lack surplus capital to commit or because they are unwilling to top up equity in a higher-cost environment.

Vietnam presents a contrasting picture. While global financing conditions remain tight following the Fed’s sustained rate hikes that pushed U.S. interest rates to 5.5%, Vietnam has maintained an accommodative stance since mid-2023.

The SBV has repeatedly instructed banks to stabilize deposit rates and reduce lending rates to support the real economy. By August 2025, system-wide credit had expanded by 9.9% year-on-year, and the government raised its 2025 credit growth target to around 16% to spur investment. Average lending rates in the domestic market remain in the 7-9% range, lower than many regional peers, making capital more accessible for developers and investors.

These policies have not only improved access to onshore funding but also supported real estate transactions, particularly M&A, where credit availability is crucial for both acquisitions and post-deal project execution.

However, this supportive environment is not without challenges. Inflationary pressures - hovering around 3-3.3% year-on-year - together with exchange rate volatility, as domestic gold prices in August surged nearly 49% year-on-year and the USD index rose by 4.43%, are gradually narrowing the policy space for further monetary easing.

This means that while Vietnam’s credit and rate conditions remain favorable compared to regional markets, investors are increasingly attentive to potential adjustments in the macro landscape.

Overall, the combination of accommodative credit growth, lower domestic lending rates, and structural banking reforms is creating both the pressure and the opportunity for repricing, consolidation, and renewed momentum in Vietnam’s real estate M&A market.

Trend No. 3: Industry leads the market, while real estate and technology maintain strong positions

Favorable macroeconomic conditions, coupled with legal reforms and supportive policies - including the new Land Law effective from August 2024 - have helped stabilize credit conditions, enhance transparency, and set the stage for growth in Vietnam’s real estate market, keeping it relatively stable compared to regional peers.

In August alone, 18 deals were recorded with a total transaction value of $2.23 billion, far surpassing July’s $786 million across 34 deals, despite fewer transactions. The four sectors leading total M&A transaction value in Vietnam are: (i) Industrials – 78 deals, (ii) Technology – 11 deals, (iii) Real Estate, and (iv) Financials – 10 deals.

It is evident that Vietnam’s industrial real estate market continues to demonstrate strong appeal for FDI inflows. According to data from the General Statistics Office, the industrial production index in August rose 8.9% year-on-year. Vietnam is emerging as a priority destination for global manufacturers and logistics players thanks to its strategic location - serving as both a bridge between Asia and Europe and a key point along the bustling international maritime route in the East Sea. At the same time, the China+1 strategy is driving many multinational corporations to shift production to Vietnam in order to diversify supply chains.

Notably, several major infrastructure projects are being pushed forward, including the Tu Lien, Tran Hung Dao, and Ngcc Hoi bridges (Hanoi - connecting to Bac Ninh and Hung Yen), Gia Binh International Airport (Bac Ninh), and the high-speed rail line linking Lao Cai-Hanoi-Hai Phong-Quang Ninh.

These projects will strengthen both regional and international connectivity. In parallel, administrative reforms and the delegation of approval authority to localities have significantly shortened project timelines.

The strong inflow of foreign capital into industrial real estate has become a clear trend, fueling rental growth and driving M&A activity in the segment. Much of this capital comes from international funds and corporations, who see Vietnam’s manufacturing and trade position as a major advantage - leading to rising demand for high-quality factories and warehouses.

Trend No. 4: Strong resilience of Vietnam’s hospitality market

From the beginning of 2025 to August, Vietnam welcomed more than 12.2 million international visitors, up 22.5% compared to the same period in 2024, and is projected to reach $31.84 billion by 2030, corresponding to a stable compound annual growth rate (CAGR) of 7.25% during this period.

Visa reforms have brought significant progress, including extending the maximum stay to 45 days and introducing a 10-year Golden Visa program aimed at attracting high-net-worth investors and skilled professionals. Tourism is increasingly becoming a key driver of Vietnam’s accelerating economy, with Ho Chi Minh City and Hanoi serving as the two main growth engines.

The first driver of this recovery comes from a series of nationally significant milestone events: the 50th Anniversary of Liberation Day (April 30, 1975-April 30, 2025) and the 80th Anniversary of the August Revolution and National Day (September 2).

These events have been widely promoted, creatively leveraging digital transformation to enhance Vietnam’s national brand image on the international stage. In just the first eight months of the year, Hanoi alone was estimated to have generated VND85.8 trillion ($3.25 billion) in tourism revenue, welcoming 21.58 million visitors (+17% year-on-year). The nationwide hotel occupancy rate averaged 59%, indicating that Vietnam’s hospitality market is steadily “heating up,” with strong growth momentum expected to continue through the last two quarters of 2025.

At Indochina Capital, a prime example can be seen since the launch of the first Wink Hotel in Ho Chi Minh City in 2020 - right in the midst of the global Covid-19 pandemic. In just six years, the portfolio has expanded to six operating hotels across Vietnam.

Another important factor lies in public administrative reforms through provincial mergers and the adoption of a two-tier local government model, streamlining procedures and shortening licensing times for new projects.

In addition, the 2024 Land Law and Resolution 68/NQ-CP are considered true “game-changers,” as they established, for the first time, a legal framework for new types of real estate such as condotels and resort villas. This not only removes long-standing legal bottlenecks but also encourages both domestic and international capital inflows, restoring investor confidence and supporting the sustainable recovery of the hospitality and resort real estate sector.

The markets showing the most positive growth are those increasingly favored by investors for their sustainable development potential, backed by robust transport infrastructure and clear local development strategies. Among them, Phu Yen, Binh Dinh, and Quang Nam-Da Nang are emerging as “rising stars” thanks to pristine coastlines, rich cultural heritage, and rapidly improving infrastructure.

Strategic projects such as the North-South Expressway and the expansion of Phu Yen Airport, combined with green tourism initiatives, are positioning these provinces as new hubs for upscale resort development. Meanwhile, Hanoi and Ho Chi Minh City continue to play a pivotal role in the urban hotel segment, leveraging their economic, cultural, and political advantages, as well as their status as frequent hosts of both national and international events.

Trend No. 5: Social housing and residential

The Ministry of Construction’s report on social housing development in the first seven months of 2025 shows that 692 projects are being implemented nationwide, with a total scale of 633,559 units. Of these, 146 projects have been completed, providing 103,717 units; 124 projects have been commenced and are under construction, with 111,622 units; and 422 projects have received investment approval, with 418,220 units.

Compared to the targets set under the scheme “Investment in building at least one million social housing units for low-income earners and industrial workers in the 2021-2030 period,” the number of projects completed, commenced, or approved by 2025 has reached 59.6%.

Social housing has a positive impact on the real estate market by increasing supply, reducing price pressures, and stabilizing the market by meeting the housing demand of a large segment of low- and middle-income households. Social housing also stimulates construction activity, helps resolve real estate inventory, and serves as a lever to ease difficulties in the market. This, in turn, contributes to achieving the country’s strategic development goals, ensuring housing for citizens, improving labor productivity, and attracting investment.

Trend No. 6: High return expectations across investor groups

The survey highlights clear differences in return expectations among various investor types. Global funds show the highest appetite for returns, with around 20% setting elevated benchmarks. This reflects their strong focus on high-growth opportunities and willingness to take on greater risks in emerging markets.

Both regional funds and developers demonstrate moderate expectations, each at approximately 15%. These groups balance the pursuit of attractive yields with considerations for market stability and long-term asset value, suggesting a more selective investment approach.

Meanwhile, Japanese institutional investors are the most conservative, with only 10% expressing high return expectations. This aligns with their traditional preference for low-risk, stable income assets, often prioritizing security over aggressive yield.

Overall, the data indicates that while global capital continues to seek outgrowth potential in markets like Vietnam, regional players and developers remain cautious yet opportunistic, whereas Japanese institutions adhere to their risk-averse strategies.

Trend No. 7: New economy assets in favour

Capital continues to shift into alternative assets across the Asia-Pacific region, following the initial boom that began in 2023. This trend reflects investors’ appetite for high-growth opportunities, leveraging long-term drivers from social and technological transformation.

Data centers have emerged as one of the most active transaction segments, fueled by the rapid digitalization of the economy and rising demand for cloud services. Regional transaction volumes reached record highs in 2024 and have remained strong in 2025, with Vietnam increasingly positioned as a competitive destination thanks to its young, tech-savvy population, strong FDI inflows into technology manufacturing, and expanding renewable energy capacity.

In 2023, Vietnam’s data center infrastructure was still at a nascent stage with a limited number of facilities compared to many regional peers. While developed markets such as Japan, Australia, and Singapore have already established large-scale data center ecosystems, Vietnam is only at the beginning of its development journey.

Nevertheless, this represents significant growth potential, as demand for data storage, processing, and management continues to surge, driven by the boom in e-commerce, fintech services, and enterprise digital transformation. Investment in Vietnam’s data center sector is expected to accelerate, particularly as the country attracts major technology corporations and global infrastructure investors.

Alongside digital infrastructure, Vietnam’s rental real estate market has recorded stable long-term growth. The market has been steadily expanding since 2017 and is expected to maintain its upward momentum through 2029. The rental housing segment currently holds the largest share, reflecting sustained demand from urban residents and traditional residential areas.

Meanwhile, the apartment-for-rent segment is growing at a faster pace, driven by rapid urbanization, the expansion of the middle class, and the increasing presence of foreign professionals working in Vietnam.

Overall, the Vietnamese market is demonstrating two parallel growth trajectories: digital infrastructure, particularly data centers, and rental real estate serving residential demand. Both represent substantial opportunities for domestic and international investors, while reflecting the dual growth drivers of the economy-urban development and digital transformation.

Trend No. 8: Vietnam’s rising construction costs

Across Asia-Pacific, rapidly rising construction and labor costs - driven by higher commodity prices, supply chain disruptions, and workforce shortages - are creating major hurdles for developers. Contractors are inflating quotes to hedge against future uncertainties, which further compounds financing risks. At the same time, investors remain cautious as economic fundamentals look fragile, leaving demand projections for new projects uncertain. As a result, many planned developments are being delayed or shelved.

However, demand for new economy assets such as data centers remains unavoidable, as supply is chronically limited and essential to digital transformation. One side effect of reduced new supply is that existing assets are becoming more sought after, helping to sustain valuations even as buyers continue to push back on pricing.

In Vietnam, construction costs have remained relatively stable compared with regional peers. With labor and material costs showing limited growth, developers still have multiple options in the tendering process, allowing them to manage budgets more effectively. This stability provides Vietnam with a competitive edge, making it an attractive destination for foreign investors looking to deploy capital in a region otherwise constrained by rising development costs.

Grade A Office Construction cost in Vietnam

Trend No. 9: AI - Digital real estate revolution

Artificial Intelligence (AI) is transforming how the real estate sector develops and manages projects, helping businesses move beyond traditional models that rely heavily on subjective judgment. By analyzing big data on customer behavior and consumption trends, AI enables the creation of “tailor-made” projects for specific customer groups, instead of mass-market developments.

In the context of smart cities, local governments such as Ho Chi Minh City, Hanoi, and Da Nang have integrated AI into urban operation centers to manage population data, traffic, environment, and water infrastructure. These factors directly influence real estate values, particularly in newly planned urban areas.

Globally, AI has been widely adopted: Zillow (U.S.) applies AI to estimate home values based on location and market trends, while Hamlet (Singapore) uses AI chatbots to advise tenants, suggest suitable apartments, and automate maintenance requests. In Vietnam, some companies have begun piloting AI in project management, smart building automation, virtual reality (VR) customer experiences, and brokerage support. In the industrial real estate segment, AI is especially valuable for energy management, building security, operational optimization, and cost savings.

Notably, AI also helps shorten the time needed to complete real estate M&A deals worldwide, with statistics showing that transactions can be finalized in less than seven months. This opens up significant potential for Vietnam to enhance advisory services and deal execution.

However, for AI to maximize its value, Vietnam needs a clear legal framework on data privacy and protection. At the same time, the technological shift poses challenges for the real estate workforce, requiring continuous upskilling to adapt to an increasingly digitalized environment.

Trend No. 10: Sustainability has become a top priority

Sustainability has now become a central focus in investment decisions. Green certifications, energy efficiency, and retrofitting existing buildings to meet ESG standards are top priorities. In Vietnam, this trend is aligned with a wave of ESG-driven capital, which is increasingly directed toward green projects, industrial parks, and professional housing. Flexible models such as phased development partnerships or partial project transfers are gaining popularity as developers seek to optimize capital and manage risks.

At the national level, Vietnam has announced its target of achieving net-zero emissions by 2050. At the corporate level, more than 85% of the country’s 500 fastest-growing companies have made or plan to make ESG commitments. In terms of policy, the government has issued Decree 80/2024/ND-CP on Direct Power Purchase Agreements (DPPA), providing an important legal framework to promote renewable energy and support sustainability goals.

At the same time, administrative boundary mergers and infrastructure upgrades are unlocking new development spaces, particularly in Hai Phong, Hai Duong, and peri-urban areas surrounding Hanoi and Ho Chi Minh City. However, challenges remain, including valuation gaps, regulatory complexities, and post-merger integration risks. To unlock Vietnam’s full potential, M&A should be approached as a long-term partnership strategy, emphasizing synergy, sustainability, and future-proof development.

Although short-term returns may face pressure, Vietnam’s fundamentals - rapid urbanization, a young population, rising housing and infrastructure demand, and resilient FDI inflows - position its M&A market as one of the most attractive in Asia, where sustainability is no longer an option but a necessity.