Sustained momentum seen across all Vietnam's real estate sectors: Knight Frank

Ho Chi Minh City and Hanoi saw solid office leasing and apartment market rebounds after the Lunar New Year holiday (Tet). Industrial land surged with record H1 supply and strong absorption, underscoring Vietnam's appeal, while eased visa policies and new direct international flights continue to support 5‑star hotels in both the cities, write Knight Frank analysts.

Office

The HCMC and Hanoi office markets maintained positive performances, with several major leasing transactions completed

Asking rents for Grade A offices in HCMC rose to $60.8 per sqm per month (up 2.7% quarter-on-quarter) and $33.4 per sqm per month for Grade B (up 0.2% quarter-on-quarter).

The increase of Grade A asking rent is as a result of Marina Central Tower launching this quarter, with a 69,400 sqm leaseable area, making it the largest office building in HCMC, and the third largest in Vietnam after Keangnam Landmark 72 and Capital Place in Hanoi.

Total new supply for the quarter is 86,700 sqm, an increase of 4.9% quarter-on-quarter and 8.8% year-on-year. Hanoi asking rents for both Grade A and Grade B remained stable, at $36 per sqm per month for Grade A (down 0.2% quarter-on-quarter) and $19.6 per sqm per month for Grade B (up 0.2% quarter-on-quarter).

Average office occupancy in HCMC declined moderately to 86% (down 3.3 percentage points quarter-on-quarter) due to the addition of new buildings, while Hanoi saw a slight improvement to 84% (up 1 percentage points). Both markets showed improvements in net absorption compared to Q1/2025, reaching 16,840 sqm (up 91% quarter-on-quarter) and 18,700 sqm (up 24%), respectively.

Multinational corporations in IT/technology, pharmaceuticals, and logistics were the key demand drivers for the office market during this period, with several significant deals concluded with the largest approximately 8,000 sqm leasable area.

Knight Frank highlight that HCMC lags behind Hanoi for new construction, with one building, The Lotus Tower, set to launch in 2025 and there are no B grade offices due to come online until 2027.

In contrast, Hanoi has seen construction commence on a series of new office developments, mainly in the Midtown and West Westlake areas. By 2025, the capital will welcome four new projects adding 79,800 sqm of total office space which Knight Frank forecasts will increase vacancy in the market to 18.5%.

“New supply in HCMC is very welcome as high-quality office space is limited for multinational companies. This new supply explains why asking rents have remained high in HCMC – but the reality is that discounts and incentives are being offered to tenants, balancing the landlord vs. tenant dynamic and creating excellent opportunities for companies to relocate and upgrade," said Alex Crane, managing director of Knight Frank Vietnam.

"In Hanoi, the abundant new supply will increase vacancy rates and thus tenants’ ability to leverage on rents even further. The reality now is that office space in Hanoi is less than 50% of the cost of a similar building in HCMC, which is compelling for companies that might be deciding to increase headcount there rather than in the south," he added.

Apartment

Positive signs in both HCMC and Hanoi’s apartment markets after a Tet holiday slowdown

The average primary asking price in HCMC reached $3,729 per sqm, reflecting an increase of 2% quarter-on-quarter and 10% year-on-year. New supply in HCMC reached approximately 1,500 units, an increase of 140% and 16% respectively, with 35% of the new supply classified in the affordable segment.

Average asking prices remained flat due to the launch of affordable units lowering the average price while unsold inventory carried into the quarter kept pricing flat.

The average primary asking price in Hanoi rose to $3,284 per sqm, reflecting increases of 6% quarter-on-quarter and 26% year-on-year. The sharp rise was mainly driven by high asking prices of new projects in the Nam Tu Liem and Ha Dong districts. In Q2/2025, Hanoi recorded approximately 7,100 new apartment units, reflecting a 129% increase quarter-on-quarter but a 16% decline year-on-year.

Approximately 2,300 units sold in HCMC, an increase of 230% quarter-on-quarter and 15% year-on-year showing good buyer sentiment. Hanoi recorded 7,400 units sold, nearly triple the previous quarter’s volume, though still 23% lower year-on-year.

This surge was driven by strong sales in new supply from Vinhomes, Keppler Tower, and The Matrix One, reflecting strong demand for high-quality products in township developments or standalone projects within a 30-minute drive from the city center.

For the second half of the year, Knight Frank forecast that 4,900 apartments will be launched for sale in HCMC while Hanoi is projected to receive over 10,000 units. HCMC's market is expected to welcome a diverse range of products, from affordable to ultra-luxury segments, with the average primary asking price holding at around $3,800 per sqm. In contrast, Hanoi's asking prices are forecasted to rise by 5-6% quarter-on-quarter, potentially bringing the city's average to approximately $3,400-3,500 per sqm.

Son Hoang, associate director of valuation and advisory at Knight Frank Vietnam. commented: “After municipal mergers, HCMC’s apartment market may require time to adapt to legal and planning updates, which are expected to delay project approvals. With limited supply, upcoming luxury projects planned for launch in H2/2025 are anticipated to drive a 5-7% increase in primary asking prices in the luxury segment, reaching approximately $6,000 per sqm. Meanwhile, Hanoi continues to perform consistently, supported by a wave of new developments from reputable developers, especially international players."

Industrial

Vietnam’s industrial land market gained great momentum in H1/2025.

Average asking prices for industrial land in tier-1 locations in the south increased to $169.4 per sqm per lease term (up 4.4% year-on-year). Limited supply allowed current industrial parks to raise asking prices, with the 85-hectare Prodezi Eco Long An Phase 1 Industrial Park launched in Q2 with asking prices at $189 per sqm per lease term.

In the Tier-1 city/provinces in the North, average asking prices rose to $136 per sqm per lease term (up 5.4% year-on-year). This growth was driven by strong demand, which enabled both existing parks to raise their asking prices and new projects to enter the market at higher price points. For example, the newly launched 280-hectare Trang Due III Phase 1 Industrial Park in Hai Phong is quoting a premium rate of $170 per sqm per lease term.

400 ha of land was absorbed in H1/2025 (up 42% year-on-year) in northern industrial parks with occupancy now at 80%. This reflects strong manufacturing expansion and reaffirms the northern region as a key investment destination. Transactions were led by sub-developers building ready-built factories and warehouses (45%) and electronics manufacturers (31%). In contrast, the Southern market, facing limited land availability and rising rents, saw net absorption of just 32 hectares, mainly in Long An and Dong Nai, with occupancy rising to 90.5%.

By the end of 2025, approximately 500 ha of new supply is expected in the South from the Cay Truong Industrial Park in Binh Duong province, and around 300 ha in the North from the Gia Loc and Kim Thanh II industrial parks in Hai Duong province. Occupied industrial land in Tier-1 cities across both regions is projected to grow at an annual rate of 3-5%, while average asking prices are expected to increase steadily by 4-6% per year.

"The full extent of the US tariff will continue to play out, but the signals from the first half of 2025 for Vietnam’s industrial property segment show positive signals. On the ground, we are still seeing demand for manufacturers expanding and deals are getting signed supporting occupancy and take-up," remarked Alex Crane.

"Our view is that the remainder of the year will continue to see measured confidence in Vietnam as manufacturers work to understand what defines ‘transshipment’ and while the U.S. works with other Asian nations on their tariffs," he added.

Hospitality

Relaxed visa rules and new direct flights propeled Vietnam’s 5‑star hotel revival in Hanoi and HCMC.

In H1/2025, the average daily rate (ADR) in HCMC increased to $152 per room per night, up 2.4% year-on-year, driven by over 22.1 million tourist arrivals (up 12% year-on-year) during the peak season of H1/2025.

The Indigo Saigon The City by IHG, also contributed to the ADR increase, offering rates of over $200 per night. The ADR for 5-star hotels in Hanoi increased by 2.6% year-on-year, to $135 per room per night, supported by good performance from existing hotels amid a significant rise in tourist arrivals, which reached 15.5 million (up 11.8% year-on-year).

In H1/2025, Hanoi’s new supply included Dusit Le Palais Tu Hoa in the Westlake area, which recorded an ADR of $124 per room per night. Average occupancy rates rose in both HCMC and Hanoi to 70% (up 4.6 percentage points year-on-year) and 67% (up 2 percentage points year-on-year), respectively.

By the end of 2025, Hanoi’s 5-star hotel market is expected to add approximately 500 rooms from three new hotels. In contrast, HCMC is not expected to see any new 5-star hotels until 2027, which is likely to maintain higher ADR’s and occupancy.

"Benefiting from visa relaxations under Resolutions No. 44/NQ-CP and 11/NQ-CP, along with an increase in direct flights from Europe, the Middle East, and India, as well as major events such as Reunification Day, “Get on Hanoi 2025”, tourism activity has seen a significant boost. This is clearly reflected in the strong growth of international tourist arrivals, up 40% year-on-year in HCMC and 22% in Hanoi. Building on this solid foundation, we believe the 5-star hotel segment will perform well through the end of 2025 and beyond,” said Son Hoang.

Tier-1 city/provinces in the North includes Hanoi, Hung Yen, Hai Phong, Bac Ninh and Hai Duong. Tier-1 city/provinces in the South includes HCMC, Binh Duong, Dong Nai, Long An and Ba Ria-Vung Tau.

Some of these cities and provinces have recently been merged to form new ones.