Vietnam: The Rising Star of Property Investment

Insights from Knight Frank Analysts

By Knight Frank analysts
Sun, June 22, 2025 | 8:00 am GMT+7

Buildings in Ho Chi Minh City, southern Vietnam. Photo courtesy of Knight Frank.

Vietnam is emerging as one of Asia’s most compelling property investment stories, according to a recent report by Knight Frank Vietnam. Released on June 19, “Vietnam Investment Guide” provides fresh insights into the country’s economic resilience, sector-specific real estate trends, and why Vietnam is rapidly becoming a magnet for global capital.

The Southeast Asian Secret is Out

For years, Vietnam has been overshadowed by its neighbors as a property investment destination. However, with an average GDP growth of 6% over the past two decades, a youthful and skilled workforce, increasing urbanization, and significant infrastructure improvements, the country is finally capturing global investors’ attention.

The Long Thanh International Airport, under construction near Ho Chi Minh City, is set to accommodate 100 million passengers annually, signifying Vietnam’s ambition to become a key logistics and investment hub in the region. Moreover, Vietnam’s exports are evolving; high-tech products now comprise over 50% of total merchandise exports, a significant increase from just 8% in 2010.

Strategic Property Sectors in Focus

Apartments: Market Segments and Buyer Trends

Vietnam’s apartment market has experienced steady growth, particularly in urban centers like Ho Chi Minh City and Hanoi. With a cumulative supply of 700,000 units since 1995, the current market caters to a broad spectrum from affordable to luxury segments. However, compared to the combined population of over 20 million in these cities, the supply remains limited.

This situation has created a high demand for apartments, evidenced by an average absorption rate of around 80% during launching events. Consequently, market primary asking prices have escalated to $3,000-$4,000 per square meter.

To navigate the limited supply, developers and buyers are branching out to satellite regions. Northern developers are shifting focus to areas like Hung Yen and Bac Ninh, while southern counterparts explore Binh Duong and Dong Nai.

Key Players and Ownership

Foreign buyers are treated similarly to Vietnamese citizens in the purchasing process, provided they possess a valid passport. While Vietnamese citizens enjoy indefinite ownership rights, foreigners can buy units in commercial housing projects for a maximum of 50 years, with a possible renewal.

The quota for foreign ownership is capped at 30% of any apartment project, and foreigners are prohibited from owning properties in areas related to national defense and security.

Rental yields in urban areas such as Hanoi and Ho Chi Minh City average 3-3.5%, while satellite areas like Binh Duong offer yields around 4-4.5%. Capital gain rates are also promising, averaging 10-15% annually in major urban hubs.

Offices: Market Segments and Tenant Trends

The total Grade A and Grade B office supply in Hanoi and Ho Chi Minh City has reached 3.7 million square meters, with Grade A offices comprising approximately 27% of this total. The recent influx of green-certified office buildings marks a significant milestone in the office market’s evolution.

A trend of “flight-to-quality” has emerged, where tenants increasingly seek high-quality office spaces. The IT and finance sectors are driving this demand, with many significant transactions reaching up to 10,000 square meters.

Ownership and Divestment

Foreign investment in the office sector can take several forms, including long-term leasehold arrangements. Regulations allow foreign investors to own building structures on leased land, which further opens investment avenues in Vietnam.

Both domestic and foreign investors are engaged in mergers and acquisitions within Vietnam’s commercial office landscape, motivated by the optimization of portfolios and favorable market opportunities.

Industrial: Market Segments and Tenant Trends

As of 2024, Vietnam’s ready-built property market has surpassed 15 million square meters, with a robust CAGR of 15% from 2018 to 2024. Modern warehouses account for 48% of this stock, elevating the quality of Vietnam’s industrial offerings.

The US-China Trade War and the COVID-19 pandemic have catalyzed a shift in investments, particularly from Chinese small and medium-sized enterprises (SMEs) in the electronics sector. In 2024, electronics accounted for 40% of the transaction value in this segment.

Key Players and Ownership

Local developers dominate the market, possessing a significant 56% market share. Notable foreign entrants, including BWID and SLP, are also expanding their portfolios as the potential of Vietnam’s industrial zones becomes evident.

Leasehold agreements primarily govern industrial property ownership, with investors required to adhere to relevant laws and regulations.

Confidence from the Ground Up

“Vietnam is no longer just a low-cost alternative – it’s a strategic, long-term play,” asserts Alex Crane, managing director of Knight Frank Vietnam. The government’s reform agenda, particularly under Resolution 68, is significantly reducing bureaucracy, supporting SMEs, and incentivizing innovation.

Trends to Watch

Global Minimum Tax

The implementation of a Global Minimum Tax, set at 15% for large multinational companies, is anticipated to elevate effective corporate tax rates for significant foreign developers operating in Vietnam.

Net-Zero Plan

In line with commitments made during COP26, Vietnam aims for net-zero emissions by 2050, with a targeted 30% reduction in carbon intensity by 2030. Developers are increasingly pursuing green certifications to meet rising tenant and investor demand.

U.S. Reciprocal Tariff on Vietnam

While Vietnam is positioned to benefit from shifts in trade dynamics, lingering uncertainties surrounding reciprocal tariffs on Vietnamese exports to the U.S. have raised concerns among investors, who are currently favoring premium residential projects.

Mergers of Provinces and Cities

Resolution 60 aims to consolidate 63 localities into six cities and 28 provinces by 2031. This merger is expected to improve efficiency in licensing and enhance public infrastructure investments.

As these changes unfold, developers are advised to stay vigilant regarding new zoning maps and potential shifts in incentives related to urban expansion efforts.

Vietnam’s property landscape continues to evolve, driven by economic resilience, strategic reforms, and increasing interest from global investors. As the country seeks to solidify its place in the international market, opportunities abound across various sectors, signaling a promising horizon for investors in the region.