Vietnam property developers shift to asset-holding strategy for stable cash flow

Vietnamese property developers are increasingly shifting away from the traditional build-to-sell model and focusing instead on accumulating long-term assets capable of generating stable recurring income, as the industry adapts to lessons learned from the market downturn of 2022-2023.

After a prolonged period of market volatility, many developers now view reliance on continuous project sales as unsustainable, particularly during periods of frozen liquidity. Companies are instead pursuing what executives describe as a “concrete pouring” strategy - building long-term foundations through income-generating assets before expanding further.

At its 2026 annual shareholders’ meeting, TTC Land (HoSE: SCR) proposed acquiring Thanh Thanh Nam, a member of TTC Group that owns the Tay Nam office tower project at No. 253 Hoang Van Thu street in Ho Chi Minh City, with around 42,000 square metres of leasable office space.

Chairman Nguyen Thanh Chuong said the acquisition aimed to create a stable financial base through recurring rental income.

“The real estate market has changed significantly compared with previous cycles,” Chuong told shareholders. “To ensure liquidity, the company needs bold decisions. With this platform, TTC Land will no longer need to worry about daily cash flow.”

Following the acquisition, TTC Land plans to consolidate all leasing operations under Thanh Thanh Nam, generating stable revenue and profit streams to support future project development.

Beyond office and retail leasing, the company is also expanding into highway rest-stop developments, including projects in Phan Thiet and Tay Ninh.

Similarly, Dat Xanh Group (HoSE: DXG) announced a new long-term growth strategy focused on diversifying income sources and reducing dependence on cyclical property sales.

Luong Tri Thin, founder and chairman of the group’s strategy council, said the company no longer viewed project development solely as a means to sell products.

“High-quality assets will be retained, operated and monetized to generate long-term cash flow,” Thin said. “Project development is no longer the end goal, but the starting point for strategic asset accumulation.”

Other developers are also seeking recurring revenue streams outside residential sales. DIC Group (HoSE: DIG) is expanding into tourism and hospitality, while Phat Dat Real Estate Development Corp (HoSE: PDR) is focusing on industrial park development.

Strategy faces funding and operational challenges

Despite the strategic shift, industry executives acknowledge that building long-term asset portfolios requires significant financial resources in a market still heavily reliant on debt financing.

Nguyen Van Dat, chairman of Phat Dat, said the company continued to transfer projects in order to recover capital amid rising borrowing costs and funding pressure, while simultaneously pursuing industrial park projects spanning more than 2,000 hectares in Quang Ngai, Tay Ninh and Dong Thap provinces.

However, many of these projects remain in the legal approval stage.

Hospitality investments have also struggled to recover profitability despite a rebound in international tourism following the pandemic.

At DIC Group, hospitality subsidiary DIC Hospitality posted higher revenue in 2025 but saw losses widen to VND85.5 billion ($3.25 million), up from VND25.5 billion a year earlier.

Meanwhile, TTC Hospitality (HoSE: VNG), which operates hotels and resorts in Da Lat, Can Tho, Ho Chi Minh City, Binh Thuan, Hue and Cambodia, has reported only modest profits, several billions of VND (VND1 billion = $38,000), over the past five years and posted a VND41 billion ($1.56 million) loss in the first quarter of 2026, partly due to high interest expenses.

The office leasing segment is also facing mounting pressure.

According to Q1/2026 reports from Knight Frank, office rents in Ho Chi Minh City are under pressure as vacancy rates rise and net absorption in Grade A buildings falls to a five-year low. Many tenants are opting to renew existing leases rather than relocate.

Vacancy rates in the city climbed to 12.6%, forcing landlords to increase incentives to retain tenants.

In Hanoi, office demand has been more resilient due to newly completed green-certified buildings, though vacancy rates remain elevated at 20.4%, pushing rents to five-year lows.

Savills Vietnam said the office market was entering a new development cycle in which building quality and operational standards, rather than supply expansion alone, would determine competitiveness.

While light renovation and operational optimization can limit costs and reduce vacancy risks, major redevelopment projects require significant capital and carry higher operational risks despite offering greater long-term rental upside.

Industry analysts say the shift toward asset accumulation marks an important strategic evolution for Vietnam’s property sector following years of volatility.

If implemented successfully, recurring-income models could provide developers with more stable cash flows, reduce dependence on cyclical project sales, and improve resilience during downturns.

However, the strategy requires not only substantial capital but also strong operational management and long-term planning capabilities, especially as financing costs remain elevated and leasing markets become increasingly competitive.