Demand for apartment rentals increases in Ho Chi Minh City

Apartment supply and rental prices increase year by year

On March 4, according to a report by Savills Vietnam, the supply is expected to increase to 8,200 units by the end of 2023 thanks to the growth of Grade B and C. Of which, 27 new projects will provide 840 units; 85% are studios and one-bedroom apartments from Grade C projects.

Real Estate - Demand for apartment rentals increases in Ho Chi Minh City — *According to Savills Vietnam's report, supply is expected to increase to 8,200 units by the end of 2023 thanks to the growth of Grade B and C.*

Future supply is limited; by 2025, only 600 units are expected to come from nine projects. Of these, five projects with 260 units are expected to reopen in 2024 after renovation.

Savills research shows that in 2023, occupancy will reach 82%, up 6 percentage points year-on-year, and rents will reach VND516,000/m2/month, up 3% year-on-year.

Rents across all grades increased year-on-year due to a healthy recovery in demand. Grade C rents saw the highest year-on-year increase of 8%, followed by Grade B at 5% and Grade A at 3%.

According to experts in the real estate sector, apartments are considered a segment least affected by negative fluctuations in the market due to real demand from people.

The average profit rate from the beginning of 2015 until now when investing in apartments has reached about 12.5% per year, including price increases and rental income.

This is considered a more stable and attractive profit compared to other investment options such as stocks, gold, foreign currency, land or saving money in the bank. The main reason is because the price of apartments is constantly increasing and the demand for buying and renting these apartments is always maintained at a high level.

Ms. Giang Huynh, Deputy Director, Head of Research and S22M Savills Ho Chi Minh City, said that the supply of residential real estate in Ho Chi Minh City is currently very low, especially for a market with more than 10 million people.

Meanwhile, the demand for buying from investors is very high, especially at the end of 2023, many people withdraw idle money to buy apartment projects.

"In the past, when real estate was still booming, many investors rushed to trade land, selling one place and then using the money to buy another place to make a profit. But now, when the market is unstable, investors mainly put their trust in apartments because the prices are reasonable, not changing much like land or townhouses. Meanwhile, they can be rented out to have a stable source of finance," said Ms. Giang Huynh.

Return of foreign experts will boost serviced apartment development

According to Mr. Neil MacGregor, General Director of Savills Vietnam, “The serviced apartment segment is still on the path of recovery and continues to grow. In addition, the return of foreign experts and the growth of FDI will promote the development of serviced apartments.

Real Estate - Demand for apartment rentals increases in Ho Chi Minh City (Figure 2). — Factors driving the positive development of serviced apartments in the market Factors driving the positive development of serviced apartments in Ho Chi Minh City are foreign experts returning and FDI growth. are foreign experts returning and FDI growth.

In 2023, the active consumption was at 504 units. Class C had the highest consumption with 320 units, including 95 units in District 1 and 88 units in Binh Thanh, Ho Chi Minh City is always in the top provinces and cities attracting high FDI.

In 2023, total FDI capital in Ho Chi Minh City reached 5.9 billion USD, up 49% year-on-year and ranked first in the country. Newly registered capital reached 598 million USD from 1,202 projects. Asian countries, such as Singapore and Japan, continued to lead. Singapore accounted for 36% of total FDI capital, followed by Japan at 22% and Canada at 9%.

According to the Ministry of Labor, War Invalids and Social Affairs of Ho Chi Minh City, there will be 16,215 foreign workers licensed in 2023, the highest in Vietnam and 92% higher than Hanoi (second place). With the ongoing economic recovery and the return of foreign experts, the demand for accommodation is expected to grow steadily.

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