Rental Prices for Houses and Offices on the Rise
The rental prices for houses and offices are on the rise, according to Savills World Research. Global economic centers such as Singapore and Hong Kong are experiencing exceptional increases in rental prices compared to other markets. Limited supply in both the buying and renting markets, coupled with high demand from a large number of foreign experts and a thriving business environment, are driving the increase in rental demand.
Increasing Rental Demand in Residential Properties
Similarly, there is a growing trend in rental demand for serviced apartments in Hanoi and Ho Chi Minh City. The return of foreign experts and the growth of foreign direct investment (FDI) are the factors driving the positive development of the serviced apartment market in these two cities.
According to Savills, the supply in Ho Chi Minh City is expected to increase to 8,200 units by the end of 2023, with 27 new projects providing 840 units. The majority of these units are studios and one-bedroom apartments in the lower price range. Rental prices for all categories have increased over the year, with Class C properties experiencing the highest increase of 8%, followed by Class B at 5%, and Class A at 3%. The occupancy rate in Ho Chi Minh City reached 82% in 2023, a 6% increase compared to the previous year.
In Hanoi, the rental market for apartments remained stable in the fourth quarter of 2023. The market recorded a supply of 6,078 units from 63 projects during this period. However, the overall supply increased by 2% throughout the year due to the addition of two Class A projects: Lancaster Luminaire and L7 West Lake in the second half of 2023. The occupancy rate in Hanoi reached 83% in the fourth quarter of 2023, with an average rental price of 580,000 VND per square meter per month, a 1% increase compared to the previous year.
Potential Investment Opportunities
Looking ahead, the market is expected to have 3,821 units in the future. In 2024, two projects, Parkroyal Serviced Suites with 261 units and Fusion Suites with 193 units, are expected to enter the market. In 2025, Tây Hồ View Complex will contribute 1,905 units, increasing the supply of Class A properties by 61% compared to 2023. Tây Hồ is projected to account for 63% of the future supply with 2,423 units.
Matthew Powell, Director of Savills Hanoi, stated that the rental demand for serviced apartments has rebounded in 2024 compared to 2023, driven by an increase in foreign experts coming to Vietnam through FDI projects. In the future, FDI inflows from large projects combined with continuous improvements in infrastructure will have an even more positive impact on rental demand.
Meeting the Expectations of Foreign Tenants
Trinh Huynh Mai, Deputy Director of Commercial Leasing at Savills Hanoi, stated that foreign experts have high requirements for the quality of apartments, location, accompanying management services, security, safety, and other amenities. Therefore, most serviced apartment operators are reputable brands.
In the Hanoi market, international operators are projected to account for 87% of the future supply with 3,309 units from nine projects. Domestic operators are expected to provide 521 units from seven projects. Furthermore, tenants in Hanoi tend to choose properties in central areas and commute to surrounding industrial zones for work. Therefore, the continued development of infrastructure will benefit serviced apartments.
“In a context of recovering demand but limited supply, serviced apartments continue to be a promising investment option with attractive profitability. However, to attract tenants, investors need to ensure factors such as location, quality of living, accompanying services, and compliance with legal regulations for foreigners renting properties,” said Mai.