Hanoi’s serviced apartment sector benefits from surging FDI

Hanoi’s serviced apartment sector benefits from surging FDI

The serviced apartment market in Hanoi is continuing to grow robustly due to a strong inflow of foreign direct investment (FDI) and a boom in industrial zones.

Photo: baodautu.vn

Hanoi brought in more than $2.16 billion in FDI in 2024, up 30 per cent on-year, placing fifth nationwide.This, combined with the expansion of industrial zones (IZs) around Hanoi, has resulted in a large number of foreign experts, engineers, and technicians coming to work and live in the region, leading to a sharp increase in demand for serviced apartments.

In 2024, Hanoi was home to 10 operating IZs covering 1,348 hectares with high occupancy rates, attracting both foreign and domestic investments, and the city is aiming to add eight more by 2030.

Neighbouring Bac Ninh province has approved up to 6,000 businesses to employ foreign workers, with nearly 15,000 individuals granted or renewing work permits.

Matthew Powell, director of Savills Hanoi, emphasised that the expansion and development of IZs, along with strong FDI inflows, has led to a sharp rise in demand for serviced apartments.

The demand, however, is primarily found in Hanoi’s market due to limited supply and the lower quality of serviced apartments in surrounding areas, while foreign professionals usually have specific accommodation requirements related to quality and services.

“As a result, demand for expatriate housing remains concentrated in Hanoi, where residents have easy access to diverse amenities and high-quality housing options. The market has also recorded an increase in rental demand, particularly as housing demand remains high while property prices continue to be elevated,” he said.

By the end of 2024, the total supply of serviced apartments in Hanoi had reached approximately 6,346 units across 64 projects, maintaining stability on-quarter and increasing by 3 per cent on-year after Swiss-Belresidences Hanoi, a serviced apartment venture in the capital city, became operational last June.

The occupancy rate increased by 2 per cent on-quarter and 84 per cent on-year. A and B-Grade apartments experienced higher occupancy rates, while C-Grade apartments saw a slight decline of 2 per cent.

The average rent increased by 1 per cent on-quarter and 2 per cent on-year, reaching nearly $24 per square metre per month.

Powell also stated that in the forthcoming years, about 20 projects are expected to come onto the market, providing nearly 4,100 new serviced apartments. In 2025 alone, seven new projects will contribute 2,889 units, with the Tay Ho View Complex projected to offer the largest supply of Grade A apartments.

Of the future supply, 83 per cent will be located in the inner city, while the remaining 17 per cent will be to the west.

International operators are optimistic about the market's growth potential, with their dominance in the serviced apartment segment projected to account for 87 per cent of future supply.

Notable international brands actively participating in this market include The Ascott, Lotte Group, Parkroyal Serviced Suites Hanoi, Shilla Hotels & Resorts, Hilton, and Hyatt.

According to the Foreign Investment Agency under the Ministry of Finance, by the end of February, total FDI in Vietnam had surpassed $6.9 billion, up 35.5 per cent on-year.

During the period, Hanoi alone had attracted more than $1.1 billion, up 2 per cent on-year. This included 51 newly registered projects with a total capital of $20.1 million, 24 projects with supplemental capital totalling $1.038 billion, and 52 cases where foreign investors either contributed capital or acquired shares, amounting to $42.7 million.

VIR