According to Savills, the serviced apartment market in Q4/2024 saw mixed trends in Ho Chi Minh City (HCMC) and Ha Noi. While HCMC faced challenges from declining FDI inflows and rising competition from rental apartments, Ha Noi's market remained more stable, supported by strong corporate demand and limited new supply. Figure out more in Savills Q4/2024 Market Brief.

1/ Serviced apartment summary in HCMC

1.1/ Supply Decline

In Q4/2024, the HCMC serviced apartment market saw a 3% quarter-on-quarter (QoQ) stock decline, though the year-on-year (YoY) supply remained stable at over 8,000 units. The decline was mainly due to:

• The closure of 55 Grade A units at Indochine Park Tower.
• The conversion of 175 serviced apartments into hotels across two projects.

The future pipeline remains limited, with only nine projects expected by 2027, adding just 700 new units to the market. Grade B serviced apartments will dominate the future supply, accounting for 67%, with an average project size of 160 units. The increasing competition from buy-to-let apartments continues to challenge the market.

1.2/ Performance Trends in the Serviced Apartment Sector in HCMC

Since 2021, the serviced apartment market has shown steady growth:

• Occupancy increased by 4 percentage points (ppts) per annum (pa).
• Rents grew by 1% pa.

In 2024, occupancy declined by 3 ppts YoY to 79% due to weaker short-stay demand in Q3/2024. Rents remained unchanged YoY at VND 515,000/m²/month. However, market conditions improved in Q4/2024, with rents rising by 2% QoQ and YoY to VND 522,000/m²/month, supported by rent escalation policies and high year-end demand. Occupancy increased by 5 ppts QoQ and 1 ppt YoY to 82%, driven by Viet Kieu, foreign visitors, and business travellers. 

Take-up was strong, with 315 units absorbed, led by Grade A at 3%, Grade B at 77% with support from short-stay demand, and Grade C at 20%.

1.3/ Future Challenges and Market Outlook in 2025 for HCMC

The serviced apartment sector in HCMC faces increasing challenges due to declining foreign direct investment (FDI) and rising competition from rental apartments. In 2024, HCMC’s FDI inflows dropped by 49% YoY, reaching US$3 billion, while newly registered capital fell by 15% YoY to US$511 million. This slowdown in foreign investment may impact demand for expat accommodation.

Additionally, the rental market continues to pose strong competition, as serviced apartment rents are 45-112% higher than upscale apartments, making affordability a key concern for tenants. By 2027, the market will see an influx of over 5,000 Grade A & B rental apartments, further intensifying competition.

2/ Serviced apartment summary in Ha Noi

2.1/ Improving Performance in Ha Noi Market – Q4/2024

The serviced apartment market in Ha Noi continued its upward trend in Q4/2024, with total stock reaching 6,246 units across 64 projects. The supply remained stable QoQ and saw a 3% YoY increase, driven by the launch of Swiss-Belresidences Ha Noi in Q3/2024.

Occupancy rates improved, rising 2 ppts QoQ and YoY to 84%. Grade A and B serviced apartments saw the highest occupancy growth, while Grade C declined by 2 ppts.

Rental prices also increased, with an average rise of 1% QoQ and 2% YoY. However, Grade C was the only segment to experience a rental decline, reflecting shifting demand patterns in the market.

2.2/ Rising Demand for Serviced Apartments from Industrial Parks

Viet Nam’s foreign direct investment (FDI) inflows remained strong in 2024, with total registered FDI reaching US$38.2 billion across 3,375 newly registered projects. Implemented FDI capital stood at US$25.4 billion, marking a 9% YoY increase, the highest level recorded. Ha Noi attracted US$2.2 billion from 293 new projects, a 30% YoY increase, ranking fifth nationwide behind Bac Ninh, Hai Phong, HCMC, and Quang Ninh.

Ha Noi's industrial park (IP) sector is expanding, driving demand for serviced apartments. By November 2024, the government approved the planning of three new industrial parks in Thuong Tin and Soc Son, covering a total of 600 hectares:

• North Thuong Tin IP – 137 ha
• Phung Hiep IP – 175 ha
• Soc Son IP – 324 ha

Ha Noi has 10 operational industrial parks spanning 1,300 hectares, with nine already at full occupancy. Expanding these industrial zones is expected to boost demand for serviced apartments, particularly from expats, foreign professionals, engineers, and technicians in high-growth areas.

2.3/ Future Supply in 2025 & Beyond

The Ha Noi serviced apartment market is set for significant growth, with 17 new projects expected to add 4,077 units from 2025 onwards. In 2025 alone, seven projects will launch 2,889 units, with Tay Ho View Complex leading as the largest Grade A development. By 2026, an additional 162 units will be introduced in Tay Ho District.

The Secondary area will account for 83% of future supply, while 17% will be concentrated in the West, reflecting shifting development trends.

Branded serviced apartments will dominate the market, making up 87% of future supply. Leading international hospitality brands entering Ha Noi’s serviced apartment sector include The Ascott, Lotte Group, Parkroyal Serviced Suites Ha Noi, Shilla Hotels & Resorts, Hilton, and Hyatt, reinforcing the city’s appeal as a prime destination for expats and corporate tenants.

Access Savills Q4/2024 Market Brief to read more information about Viet Nam real estate market overview in the last quarter.