Vietnam's real estate landscape in Q4/2024

Avison Young Vietnam analysts offer an insight into the developments in Vietnam's key real estate segments in Q4/2024 and forecast for 2025.

Easing global interest rates have encouraged investors in the quest for real estate investment opportunities, leveraging the robust economic foundation in the Asia-Pacific region.

In Vietnam, the year of 2024 witnessed an influx of FDI into strategic assets such as development sites, industrial and logistics properties, residential real estate, and office spaces.

“The surge in foreign capital inflows into Vietnam’s real estate market highlights its resilience and considerable growth potential. Changes in investment preferences which were observed in the final quarter of 2024, whether for development, leasing, or acquiring properties, reflect emerging trends and prospects for certain sub markets, segments, and real estate products in the near future,” said David Jackson, principal and CEO, Avison Young Vietnam.

Purpose of leasing transactions reflects office segment shifts

In Q4/2024, the office markets in Ho Chi Minh City and Hanoi remained stable, with rental rates and occupancy levels sustaining positive trends. While the new supply in 2024 did not reach the level of the previous year, market activities demonstrated a tendency toward optimizing workspaces and rental costs.

In HCMC, most transactions involved renewals, lease extensions, office relocations within the same district or from District 1 to the new Thu Thiem urban area. Grade A and Grade B rental rates stood at $54/sqm/month and $31/sqm/month on average, respectively, with an overall market occupancy rate of 88%.

Over the next two years, new supply will primarily concentrate in fringe areas such as District 3, District 7, Tan Binh district, Binh Thanh district, and Thu Duc city, with notable projects including The Beacon, Yteco Tower, and Daikin Tower.

In Q4/2024, Hanoi welcomed the Grade B Gems Empire Tower in Thanh Xuan district. The EDGE-certified project achieved a 90% occupancy rate at launch. Market-wide, rental rates and occupancy levels remained unchanged, with leasing activity concentrated in areas with robust transportation infrastructure such as Cau Giay, Thanh Xuan, and Nam Tu Liem. Between 2025 and 2027, new supply is projected to reach 300,000 sqm, with prominent projects including Tien Bo Plaza and B3CC1.

Reflecting on leasing activity throughout 2024, a growing diversification of office demand is anticipated in the time to come. Central office spaces with stable or slightly rising rental rates continue to attract large international clients in the technology, finance industries, and professional services providers.

Meanwhile, new projects in non-CBD areas are enhancing supply to cater to diverse office needs. Whether businesses choose to relocate or stay, there is a clear focus on modern, high-quality workspaces with reasonable rental costs to ensure effective financial management and an improved working environment.

Retail space in shopping malls expands in terms of quantity and quality

In 2024, HCMC witnessed a surge in modern retail space supply, with three new projects: Vincom Mega Mall Grand Park, Parc Mall, and Central Premium Mall. Additional supply, coupled with competitive rental rates, large-scale projects which meet international standards and with integrated amenities, provided retailers with strong incentives to enter and expand in the market.

For instance, Parc Mall and Central Premium Mall achieved occupancy rates of 100% and 60%, respectively, shortly after opening, boosting the non-central occupancy rate by 7% to 82% in Q4/2024. On January 10, 2025, the city will welcome Central Mall Vo Van Kiet by Satra, further enriching the shopping and entertainment options for residents in the southwestern area.

In Hanoi, Aeon Mall Xuan Thuy is set to open on January 10, 2025. New supply of shopping centers in Hanoi in 2024 accounts for only 20% of the previous year’s volume. Across the market, rental rates and occupancy levels rose in Q4, reaching $37-140/sqm/month in central areas (up 3%) and $20-88/sqm/month in non-central areas (up 5% compared to Q4/2023).

Over the next two years, Hanoi expects to welcome two new projects - Hanoi Centre within the Tien Bo Plaza complex, operated by Keppel, and Tonshin-Starlake under Takashimaya. As a result, the retail real estate segment is expected to remain vibrant and competitive, attracting more retailers in the coming years.

Mid-range and high-end apartments continue to grow in major cities, infrastructure accelerates suburban development

Several new condominium projects were launched in Q4/2024, including The Opus One, Kiều by Kita, and King Crown Infinity in Ho Chi Minh City, and Imperia Co Loa, The Senique Hanoi, and Luminere Springbay in Hanoi.

In HCMC, the high-end segment experienced the strongest growth in price in 2024, with primary price at Lancaster Legacy, The Metropole, and The River Thu Thiem exceeding $8,000/sqm.

Although supply has improved, high prices have driven demand toward Binh Duong, Dong Nai, and Long An, where infrastructure is being developed, and prices are more affordable ($1,100-1,500/sqm in areas like Thuan An and Di An, Binh Duong).

In 2025, Ho Chi Minh city plans to launch 50,000 units from 17 projects, including The Global City, Diamond Valley Van Phuc, and Eco Smart City, with 11 out of 17 projects are in Thu Duc city.

In Hanoi, primary prices increased by 5% quarter-on-quarter, averaging $2,600-3,600/sqm. After a heated first half of 2024, price growth is expected to stabilize moving forward. The overall market absorption rate reached 80-85%, higher than HCMC’s 70-75%. In 2025, 10 new projects with over 13,500 units, including Central Residence, Vinhomes Co Loa, and Bac Hanoi Smart City, will be launched.

Rising input costs (land taxes, construction, and design expenses) and product positioning will push the average apartment prices higher in major cities. Suburban development is expected to continue, driven by investments in urban railways, forming satellite urban hubs with extensive condominium projects. Recently, HCMC proposed a four-lane elevated road on National Highway 13 through Thu Duc city, accelerating development towards Binh Duong.

Rising demand for ready-built factories and ready-built warehouses driven by e-commerce growth and FDI

In Q4/2024, industrial land rental rates and occupancy levels in Hanoi and HCMC remained unchanged from the previous quarter and showed little variation from the same period last year. These key markets continue to play a central role in promoting industrial development in the surrounding areas.

In the south, Binh Duong and Long An led industrial real estate transactions in 2024, accounting for nearly 40% of active industrial parks in the southern economic zone. In the north, Bac Ninh and Quang Ninh stood out with notable transactions, including Weifang Goer Group’s acquisition of Goertek’s project in Bac Ninh and Coremax’s purchase of a plot in DeepC Industrial Park, Quang Ninh.

Industrial real estate M&A activities remained positive in 2024, driven largely by foreign investors. This segment represented 78% of total real estate transactions in Vietnam in 2024, focusing on land acquisitions for industrial development and asset trading.

The growth of e-commerce and FDI in manufacturing continues to fuel demand for ready-built factories and warehouses.

Chi Vu, senior manager, industrial services of Avison Young Vietnam commented: “Donald Trump's re-election as U.S. President is expected to accelerate the shift of production to other countries, with Vietnam positioned as a strategic destination due to its advantages. This creates significant opportunities for developers and industrial real estate firms. Ready-built warehouses and factories are expected to grow in both supply and variety as market demand rises.”