On December 23, 2023, the Vietnam Real Estate Brokerage Association (VARS) hosted a seminar entitled "The Potential of Lease Homes" at Hanoi. This event brought attention to the recovering Vietnamese real estate market, with many experts attesting to the growth prospects, particularly within the leasing sector.
Dr. Nguyen Van Dinh, President of VARS, pointed out the upward trend in property prices within Hanoi's city centers. He noted, "The average apartment prices in four central districts of Hanoi have doubled since early 2019, increasingly at rates exceeding 30% compared to the overall market average." The districts of Hai Ba Trung and Dong Da have recorded the highest price increases, attributed to favorable pricing compared to newly launched projects located on the outskirts.
The seminar also reviewed the launch of approximately 30,000 new apartment products expected for 2024 as the market emerges from previous downturns. Investment opportunities are particularly visible within the northern regions, where the economic outlook is quite promising due to foreign direct investment (FDI) and the expansion of high-tech industrial parks.
Mr. Le Dinh Chung, CEO of SGO Home, described lease homes as long-term rental apartments typically situated within high-end real estate projects. Unlike traditional purchases, lease homes grant temporary usage rights often extended over decades, taking advantage of premium locations.
Chung emphasized, "The lease home models are prevalent and successful across developed countries. They strike the right balance between generating rental income and providing potential for asset appreciation."
A significant point raised is the growing demand for luxury living, propelled by the increasing middle class and foreign experts working in Vietnam, which drives the need for lease homes. The service apartment market provides attractive returns; Chung noted, "Despite global challenges, the Vietnamese economy remains resilient, supported by strong GDP growth and controlled inflation. This creates fertile ground for property investments, aligned with market needs."
Dr. Vo Tri Thanh highlighted strong demand trends among multiple groups seeking rentals, including foreigners, local professionals, and young renters. Service apartments are increasingly appealing due to their operational efficiency compared to standard hotel accommodations. The occupancy rate of these apartments ranges from 80% to 89%, significantly higher than hotel occupancy rates hovering between 68% and 70%.
Investors are particularly interested as high-end service apartments can be secured at prices 35% to 70% below similar properties on the market, translating to higher rental yields of 25% to 50% more than traditional long-term leases.
According to experts, the current scenario indicates a scarcity of available high-end apartments for rent, with predictions of continued growth performance attributed to sustained market demand. The seminar also discussed necessary conditions for successful real estate investment, including compliance with regulations, effective management of properties, and responding to market trends.
"The potential for luxury rental apartments is undisputed," remarked Dr. Dinh. He pointed out the restrictive nature of new developments owing to limited land supply and stringent regulations on construction. Consequently, investors are incentivized to seek out high-end rental service apartments, particularly within core urban districts such as Hoan Kiem and Ba Dinh.
Economic specialists also affirmed the trend toward lease home investments as offering dual returns: steady rental income and the appreciation of capital assets. The presentation at the seminar emphasized not only the growth potential but also the strategic benefits of investing within the leasing market, particularly for urban projects where developers manage properties with reputable international firms.
Mr. Nguyen Thanh Ha, founder of TNTP International Law Firm, cautioned investors to remain vigilant about legal aspects, particularly concerning project owners and tenancy agreements. He stressed the importance of these factors to mitigate risks associated with leasing arrangements.
Looking forward, the seminar established optimism among stakeholders about the future of Vietnam’s lease home market. With steady growth forecasts driven by structural economic changes, urbanization, and demographic trends, the potential for high-quality rental offerings remains largely untapped, making it an attractive focus for both local and foreign investors.
