Serviced apartment market benefits from FDI growth

According to Savills' Q3/2024 report, serviced apartment rental prices and occupancy rates remained stable, and both increased year-on-year. Occupancy rates remained stable quarter-on-quarter at 83%, up slightly by 2 percentage points year-on-year.

The rental price of serviced apartments in Hanoi as of Q3/2024 reached VND588,000/m2/month, an average decrease of 2% quarter-on-quarter, due to a 4% decrease in class A and a 2% decrease in class C, but still a slight increase of 2% year-on-year.

The supply of Grade A serviced apartments is still mainly concentrated in Tay Ho. Meanwhile, the supply in Hai Ba Trung, Gia Lam, and Long Bien is all Grade B.

Serviced apartment performance in Q3/2024 (Source: Savills Vietnam).

Mr. Matthew Powell - Director of Savills Hanoi explained: "Abundant foreign direct investment capital and the expansion of industrial zones attract many foreign experts to work in Vietnam. This helps create a stable demand for the serviced apartment segment".

According to the leader, many businesses are currently tending to diversify their supply chains or completely withdraw their production lines from China, because labor and production costs in this country are no longer as competitive as before.

In this context, Vietnam emerges as an attractive destination thanks to its strategic location in the heart of Southeast Asia.

At the same time, Vietnam has an advantage in labor costs, with the average income of the manufacturing industry at 329 USD/month, among the lowest in the region. Compared to neighboring countries, this figure is only higher than Indonesia and about 3.4 times lower than China.

In addition, the Vietnamese Government has also continuously introduced preferential corporate income tax policies to increase Vietnam's ability to attract foreign investment.

According to the General Statistics Office, as of August 2024, total FDI in Vietnam reached 20.5 billion USD, an increase of 7% year-on-year.

Realized FDI capital reached 14.2 billion USD, up 8% year-on-year, recording the highest level in the past 5 years.

In Hanoi alone, FDI capital reached 1,476.3 million USD, a sharp increase of 71% compared to the previous year, with 178 new projects licensed.

Not only limited to the capital, northern provinces neighboring Hanoi such as Bac Ninh, Phu Tho, Bac Giang and Thai Nguyen also have significant capital flows, increasing housing demand thanks to attracting more and more foreign experts.

Typically, according to data from the Ministry of Planning and Investment, as of September 2024, Bac Ninh is leading with a total registered investment capital of more than 4.5 billion USD, accounting for 18.2% of the total investment capital of the country, 3.47 times higher than the same period.

Although housing demand from foreign experts is increasing, the supply of serviced apartments in these provinces remains limited.

At the same time, the quality of housing products has not met high-end standards. Therefore, foreign experts still tend to choose Hanoi to live in order to easily access a diverse system of utilities and a high-quality housing supply.

The development of infrastructure connecting Hanoi and neighboring provinces also facilitates foreign experts to access the city center as well as travel to neighboring provinces of the capital.

Some of the outstanding projects include National Highway 1A, National Highway 18, Hanoi - Thai Nguyen Expressway...

Thanks to stable demand, serviced apartment occupancy in Q3/2024 continued to remain at 83%, up 2 percentage points year-on-year.

The total supply of serviced apartments in the capital last quarter reached 6,246 units and 2,372 units are expected to come into operation in 2025 from 4 projects. The future supply of serviced apartments is mainly concentrated in the inner city and the West, with 83% concentrated in the inner city and the remaining 17% in the West.

Source: https://www.nguoiduatin.vn/thi-truong-can-ho-dich-vu-huong-loi-tu-tang-truong-fdi-204241011195042126.htm