Eyes on Vietnam: The quiet giant of Asian real estate is waking up

VIETNAM’S REAL ESTATE AWAKENING: THE QUIET GIANT OF ASIA STEPS INTO THE SPOTLIGHT
By Knight Frank Analysts

THE SOUTHEAST ASIAN SECRET IS OUT
For years, Vietnam operated under the radar of global investors, overshadowed by larger regional economies. Yet, with an average GDP growth of 6% over the past two decades, a young and increasingly skilled workforce, rapid urbanization, and ambitious infrastructure upgrades, the country is now commanding attention as one of Asia’s most compelling property investment destinations.

Vietnam’s strategic vision is embodied in landmark projects like Long Thanh International Airport , currently under construction near Ho Chi Minh City. With a planned capacity of 100 million passengers annually, the airport underscores Vietnam’s ambition to become a regional logistics and investment hub. The nation’s economic transformation is further evidenced by its export evolution: high tech products now constitute over 50% of total merchandise exports, a dramatic rise from just 8% in 2010.



STRATEGIC PROPERTY SECTORS IN FOCUS

APARTMENTS: MARKET SEGMENTS AND BUYER TRENDS
Vietnam’s apartment market has experienced sustained growth over the past 20 years, particularly in densely populated urban centers like Ho Chi Minh City (HCMC) and Hanoi . These two cities dominate the sector, offering a cumulative supply of 700,000 units since 1995, spanning affordable to ultra luxury segments. However, this supply remains insufficient for a combined urban population exceeding 20 million .

Limited transparent land availability and persistent legal complexities have exacerbated supply shortages in both cities. With demand outpacing supply, apartments have become highly sought after, achieving average absorption rates of around 80% at launch events . Primary asking prices in HCMC and Hanoi now range between $3,000–4,000 per square meter , pushing buyers toward satellite regions to address affordability and supply constraints.

In the north , developers and buyers are expanding into Hung Yen, Bac Ninh, and Ha Nam , while in the south , Binh Duong, Dong Nai, Long An, and Ba Ria Vung Tau are emerging as key alternatives.

KEY PLAYERS AND FOREIGN BUYER PROCEDURES
Foreign buyers enjoy near parity with Vietnamese citizens when purchasing apartments, provided they hold a valid passport or legal entry status. Ownership rights differ significantly:
Vietnamese citizens may own apartments indefinitely without restrictions.
Foreigners are permitted to purchase units only within commercial housing projects , with ownership limited to 50 years , renewable once for an additional term not exceeding 50 years (as per Article 20, Housing Law 2023 ).
Foreign ownership is capped at 30% of total units in any given project.
Properties in national defense or security zones are off limits to foreign buyers.

RENTAL YIELDS AND CAPITAL GAINS
Core cities like Hanoi and HCMC offer average rental yields of 3–3.5% , while more affordable satellite areas such as Binh Duong deliver higher yields of 4–4.5% . Capital appreciation remains robust, with major urban areas averaging 10–15% annual gains , compared to 8–12% in neighboring regions.

DIVESTMENT AND FINANCING
Foreign individuals may resell apartments to Vietnamese citizens, overseas Vietnamese, or eligible foreign entities , though new foreign buyers inherit the remaining duration of the original ownership term.
Three primary fees apply to purchases:
1. Value Added Tax (VAT)
2. Registration fee
3. Maintenance fee

Foreign buyers meeting financial criteria may qualify for bank loans with a loan to value (LTV) ratio of 50–70% .



OFFICES: MARKET SEGMENTS AND TENANT TRENDS
The total Grade A and Grade B office supply in Hanoi and HCMC has reached 3.7 million square meters , with Grade A accounting for 27% of the stock. Prime locations include HCMC’s District 1 and Thu Thiem New Urban Area , as well as Hanoi’s Midtown and West districts .

Over the past two years, green certified office buildings have dominated new supply, marking a significant shift toward sustainability. Both markets have witnessed a "flight to quality" trend , with high absorption rates in premium offices. The IT/technology and finance/banking/insurance sectors are key drivers, often securing large scale leases of up to 10,000 sqm .

KEY PLAYERS
HCMC’s office market is dynamic, with 69% developed by domestic firms and 31% by international players .
Hanoi’s market remains locally driven, with over 80% of supply developed by Vietnamese firms.

OWNERSHIP AND DIVESTMENT
Foreign investors may acquire office buildings through:
Long term leasehold agreements
Purchase via Vietnamese entities , including ownership of structures on leased land.

Vietnam’s office market is active in mergers and acquisitions (M&A) , driven by portfolio optimization, financial restructuring, or market opportunities. Transactions occur via direct sales, public auctions, or joint ventures .

Tenants, while lacking ownership rights, may sublet, assign leases, or transfer business operations under lease agreement terms. Strata Title (long term lease contracts) offer added flexibility for tenants engaged in real estate business operations.

RELATED TAXES
Value Added Tax (VAT) : 10% on office leasing (Law No. 48/2024/QH15, Decree No. 180/2024/ND CP).
Corporate Income Tax (CIT) : 20% for eligible entities (Law No. 32/2013/QH13).



INDUSTRIAL: MARKET SEGMENTS AND TENANT TRENDS
As of 2024, Vietnam’s ready built property market exceeds 15 million sqm , reflecting a 15% annual growth rate (CAGR 2018–2024) . Modern supply accounts for 48% of total warehouse stock , enhancing the industrial landscape with high standard, flexible solutions.

Since the US China Trade War and COVID 19 pandemic , Vietnam has seen a shift in investment from Chinese SMEs , particularly in electronics . In 2024, 40% of major transactions for ready built factories/warehouses came from the electronics sector, followed by automobile/vehicle components and third party logistics (3PLs) .

KEY PLAYERS
Local developers dominate with a 56% market share , including Kinh Bac City, Sonadezi, TTC Dang Huynh, and KCN . However, foreign developers are expanding aggressively, with notable names like BWID, SLP, Mapletree, Frasers, Cainiao, Mitsubishi, and WHA entering the market through acquisitions.

OWNERSHIP
Industrial property ownership typically involves long term leasehold agreements , where developers lease land from the government or private owners while retaining ownership of buildings. Investors may sub lease or purchase long term leasehold rights to portions of—or entire—projects, subject to lease terms and regulations.

DIVESTMENT
Subleasing is more common than property assignment, allowing tenants to adjust space requirements without terminating leases. Developers seeking divestment opportunities often target high yield properties, though expectation gaps between buyers and sellers remain a hurdle.

RELATED TAXES
VAT : 10% on factory/warehouse leasing (Law No. 48/2024/QH15, Decree No. 180/2024/ND CP).
Corporate Income Tax (CIT) :
20% for the first 10 years (with 2 year exemption and 50% reduction for the next 4 years ).
10% for high tech and supporting industries over 15 years (including 4 year exemption and 50% discount for the following 9 years ).



CONFIDENCE FROM THE GROUND UP
“Vietnam is no longer just a low cost alternative—it’s a strategic, long term play ,” said Alex Crane, Managing Director of Knight Frank Vietnam . “The government’s reform agenda, particularly Resolution 68 , is reducing red tape, supporting SMEs, and incentivizing innovation. Despite global headwinds, Vietnam’s fundamentals remain incredibly strong .”

TRENDS TO WATCH

GLOBAL MINIMUM TAX
The 15% minimum effective tax rate for multinational companies with revenues exceeding €750 million will likely increase tax burdens for major foreign developers. Vietnam’s Draft Decree on Resolution 107/2023/QH15 , released for public consultation in November 2024 , will provide further clarity.

NET ZERO PLAN
Vietnam has committed to net zero emissions by 2050 (COP26) and aims to reduce carbon intensity by 30% by 2030 . While green standards will not be legally mandatory from 2026, developers of new Grade A offices in HCMC and Hanoi are pursuing EDGE, LEED, or WELL certifications to meet tenant and investor demand.

U.S. RECIPROCAL TARIFFS ON VIETNAM
Vietnam remains a key beneficiary of the "China+N" diversification strategy , but it is also exposed to U.S. reciprocal tariffs . Pending clarity from bilateral talks (concluding Q2 2025) , investor sentiment has been dampened, leading to a shift toward prime residential projects for defensive yields.

MERGERS OF PROVINCES AND CITIES
Resolution 60 will consolidate 63 localities into 6 cities and 28 provinces (2025–2031) , aiming to:
Streamline one stop licensing
Unlock larger land banks
Channel infrastructure funds more efficiently

The first phase will merge HCMC with Binh Duong and Ba Ria Vung Tau into "Greater HCMC City" , while Long An will absorb Tay Ninh . Developers should monitor new zoning maps , as some current incentives may expire within two years of each merger . The consolidation is expected to boost Vietnam’s ranking in the World Bank’s Ease of Doing Business Index .