Vietnam’s Real Estate Market: A Rising Star in Southeast Asia

Vietnam’s real estate market is making significant strides, solidifying its position as the third-largest in the Southeast Asian region. The country’s growth trajectory can be largely attributed to its strategic location, favorable demographics, and an increasingly open policy towards foreign direct investment (FDI). In 2024, the property sector notably thrived in various segments including offices, ready-built factories, warehouses, and apartments.

The Office Market: A Surge of Activity

The office market in Vietnam experienced an impressive surge in 2024, with net absorption surpassing 160,000 square meters—the highest in the last five years. This growth was largely fueled by thriving sectors such as information technology, finance, and technology services.

In Ho Chi Minh City, over 118,000 square meters of new office space came online, predominantly in prime District 1. Noteworthy developments included The Nexus and Riverfront Financial Centre, which attracted ample interest from potential tenants. Meanwhile, Hanoi saw nearly 87,000 square meters of new office spaces, with high-quality construction and competitive leasing terms driving pre-leases.

As Leo Nguyen, senior director of occupier strategy and solutions at Knight Frank Vietnam, aptly put it, “2024 was a record year… Leasing activities are expected to grow steadily in both Ho Chi Minh City and Hanoi.” This trend hints at competitive pricing and enhanced services becoming increasingly important for landlords aiming to meet tenant expectations.

Ready-Built Factories and Warehouses: The “China-Plus-One” Strategy

Vietnam has emerged as a key player in the global supply chain, especially in light of the US-China trade war. The country solidified its role as a “China-Plus-One” destination, appealing to foreign companies looking to diversify their manufacturing bases.

Over the past six years, the ready-built factory (RBF) and ready-built warehouse (RBW) market in Vietnam has seen a remarkable growth, doubling its total supply from 6.6 million square meters in 2018 to over 15.6 million square meters in 2024. This boom has been driven primarily by institutional developers like BW, SLP, and Frasers.

Occupancy rates have exceeded 80% in both regions, bolstered by a rapid expansion in e-commerce and inflows of small- and medium-sized enterprises from China and Europe. As Son Hoang, valuation and advisory associate director at Knight Frank Vietnam, noted, “Demand for ready-built warehouses and factories in 2025 will remain strong.” Government initiatives to support manufacturing and trade further emphasize Vietnam’s growth potential.

The Apartment Market: Divergent Paths for Two Major Cities

The apartment market in Vietnam displayed contrasting dynamics between Hanoi and Ho Chi Minh City in 2024. Hanoi’s market flourished with a whopping 27,268 new units introduced, a three-fold increase from the previous year. Conversely, Ho Chi Minh City faced challenges due to tightened credit control and legal issues, resulting in the introduction of less than 4,900 new units—a staggering decline of 58% year-over-year.

Despite these challenges, Ho Chi Minh City’s apartment market showed signs of recovery, with an absorption rate of 63%, translating to over 6,200 units sold. On the other hand, Hanoi boasted a remarkable 98% absorption rate, reflecting a robust demand that led to the sale of more than 30,700 units—three times that of 2023 and the highest in five years.

Looking ahead, projections for 2025-2026 indicate that Ho Chi Minh City is set to welcome over 24,000 units, predominantly in 2026. In contrast, Hanoi is projected to maintain a steady influx of over 20,000 units annually, focusing mainly on township projects. Hoang noted, “Integrated townships are redefining modern living,” signaling an exciting evolution in urban residential landscapes.

Economic Backdrop: A Bright Future Ahead

The optimism surrounding Vietnam’s real estate sector is backed by solid fundamentals. Investors and developers alike are gearing up for a new cycle of growth in 2025, fueled by renewed confidence and revised legislation. As the market anticipates a vibrant and competitive landscape, the industrial sector is especially poised for robust growth, driven by strong foreign investment, infrastructural developments, and a favorable economic climate aimed at achieving an 8% GDP growth.

This multifaceted growth across the office, industrial, and residential real estate markets not only marks a turning point for Vietnam but also highlights its ascent as a leading destination for both domestic and international investors in Southeast Asia. The country’s real estate market may very well be on the cusp of a groundbreaking transformation, one that could redefine the scope and scale of urban living and business in the region.