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| FDI capital affects the serviced apartment market in two ways. (Photo: Thu Giang) |
Savills experts commented that the increase in foreign direct investment (FDI) has positively impacted the serviced apartment market both directly and indirectly. Hanoi has received investment capital in developing serviced apartment projects as well as increased demand for the segment when a large number of experts come and work in neighboring industrial parks.
Along with Hanoi, neighboring localities such as Bac Ninh and Hai Phong also have potential to develop serviced apartments. Projects in these provinces need to be invested in and developed systematically and conveniently to attract and retain tenants.
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Ms. Do Thi Thu Hang - Senior Director of Consulting and Research Department of Savills Hanoi analyzed that FDI capital affects the serviced apartment market in two directions.
The first is the direct impact direction, foreign investors pour capital into serviced apartment projects.
For example, the Hanoi market currently records many large projects invested by Korean and Japanese investors such as Lotte Center Lieu Giai, Lotte Mall West Lake, Keangnam Landmark 72, Roygent Parks or The Authentic Haseko Long Bien...
Investors develop class A serviced apartments to serve foreign experts from Japan, Korea, Singapore, etc. who come to Vietnam for long-term work. These apartments are fully equipped with amenities, ready for immediate use. The project also has support services for individuals and families living long-term.
The second direction is the indirect impact of FDI on the serviced apartment market in the direction of increasing demand for this segment. Specifically, the industrial real estate market is currently strongly attracting FDI and Vietnam has received attention from many foreign investors and large enterprises such as Samsung, LG, Foxconn...
By the end of November 2024, the total newly registered, adjusted and contributed capital for share purchase by foreign investors in Vietnam reached nearly 31.4 billion USD. Foreign investors invested in 55 provinces and cities across the country in the first 11 months of 2024.
FDI increases, the demand for land and ready-built factory rental also increases, especially in developed or emerging localities such as Bac Ninh, Hai Phong, Bac Giang ... Among them, Bac Ninh is currently the most prominent area when leading the country in attracting FDI with a total registered investment capital of nearly 5.04 billion USD, accounting for 16% of the total investment capital of the country, more than 3 times higher than the same period.
At the same time, Bac Ninh also owns the largest supply of ready-built factories and warehouses in the Northern region, accounting for 40% of the total supply. It is followed by Hai Phong with 33% market share. In addition, there are neighboring localities of Hanoi such as Vinh Phuc, Thai Nguyen and Ha Nam.
Analyzing the relationship between the development of industrial real estate and the serviced apartment segment, Ms. Hang shared that when businesses invest in leasing land, factories or pre-built warehouses, they often send experts to work.
In the early stages, these experts tend to consider and choose serviced apartments. They prioritize choosing serviced apartments in Hanoi because of the full range of amenities, from accommodation, entertainment activities to schools for their children. Not to mention, the increasingly developed transportation system also supports the experts to travel daily, from apartments in Hanoi to neighboring industrial parks for work.
Responding to market demand, Ms. Hang forecasts that in the future, the serviced apartment market in Hanoi will still maintain a prominent position. In the next 3 years, there will be more than 2,000 serviced apartments introduced to the market; of which, the West Lake area is expected to contribute a significant number. The popular areas of Tay Ho and Ba Dinh will continue to have a lot of supply.
Some localities that have successfully attracted FDI capital such as Bac Ninh, Bac Giang, Thai Nguyen, Hai Phong, Quang Ninh... are also having some investors considering developing serviced apartments with quality products, international operators, diverse utilities, and full services necessary to compete with the Hanoi market to attract the group of experts working locally. These markets currently also have many large supporting utilities such as international schools, high-quality hospitals, and golf courses.
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