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Analysis of the Real Estate and Mortgage Market in Vietnam - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

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  • 120 Pages
  • August 2022
  • Region: Vietnam
  • Mordor Intelligence
  • ID: 5572759
The real estate and mortgage market in Vietnam is projected to register a CAGR of over 7% during the forecast period 2022-2027.

The COVID-19 pandemic had a significant impact on the real estate and mortgage market in Vietnam. Hanoi launched 4,800 new apartments in Q1 2020, the lowest in five years, as the pandemic delayed developers’ plans. The real estate market somewhat stagnated even before the COVID-19 outbreak. In the last two years, the situation turned worse. Due to the pandemic, enterprises were under severe stress to keep their business running. Meanwhile, the government identified public investment as a key solution to boost growth. A better infrastructure system, therefore, could also be seen as welcoming news for the real estate market for further development over the coming years.

In commercial real estate, the hospitality sector in Vietnam is experiencing high growth. The domestic hospitality market is expected to recover strongly with the gradual resumption of domestic and international tourism. In 2021, 32 hotels with 11,993 rooms were launched. A further 27 schemes and 18,303 keys are due for completion in 2022, while 26 hotels with 6,859 keys have been earmarked for 2023, and 38 projects and 14,360 rooms are already on the books for 2024 and beyond.

In the residential segment, the government is supporting affordable housing for the low-income group, which is anticipated to promote the residential real estate business in the nation. In Q2 2021, the Ministry of Construction reported that Ho Chi Minh City currently has two affordable apartment projects, namely, the East Gate project and the Tecco Town project. The Tecco Town project in Binh Tan District costs about VND 24 million (USD 1,050) per square meter, and the East Gate in Thu Duc City costs about VND 27 million (USD 1,180) per square meter.

In the office segment, the banking/insurance, manufacturing, and IT sectors are expected to drive demand, with co-working spaces showing particularly notable growth.

In the retail segment, many new retail brands are setting up stores or looking to set up stores in Vietnam, introducing new concepts to the local market to attract visitors and develop commercial sector activities.

Another key factor to support the market includes the new legal mechanisms, including recent regulations to issue land use rights certificates for condotel and the Ministry of Natural Resources and Environment (MARD) easing regulations for the sale of land plots in suburban areas of Hanoi and Ho Chi Minh City.

Growth in urbanization and population in Vietnam over the coming years is expected to drive the residential and commercial sectors in the country, which in turn, is expected to propel the demand for real estate over the coming years.

Key Market Trends

Increased Population and Urbanization

Vietnam is currently experiencing one of the most intensive urban transitions in the world. Its urban population doubled over the last thirty years. Since 2010, it has been growing at about 3% per year, placing Vietnam’s urbanization rate above the Southeast Asian annual average (2.5%) and very close to China’s rate of 3.1%.

The extensive development of cities, attracting more population movement from small towns to large cities, has boosted the demand for residential products. Vietnamese population in 2021 was 97.33 million and is expected to reach 120 million by 2050. According to World Bank statistics, the urban population in Vietnam was 31.1% in 2011 and is expected to reach 37.1% in 2021.

According to the latest UN projections, half of Vietnam’s population will be urban by 2039, and that figure will reach 60% by 2050.

This shift from rural to urban society is closely associated with socioeconomic reforms launched in the mid-1980s, which progressively liberalized the economy and relaxed the grip of the state on population movements and activities. Known as Doi Moi (literally “new change”), these reforms removed constraints on the movement of people from rural to urban places and allowed occupational shifts away from agriculture.

According to IMF’s October 2021 forecast, Vietnam’s gross domestic product (GDP) growth is projected to grow significantly from USD 343.1 billion in 2020 to USD 630.5 billion by 2026.

The country is experiencing rapid demographic and social changes, which are anticipated to support the effective demand for the residential real estate industry over the coming years.

Growth Trend in Vietnamese E-commerce and Industrial Real Estate

The commercial real estate market in Vietnam is expected to record a CAGR of 14.89% over the forecast period. Continuing the momentum from 2018, Vietnam welcomed nearly 13 million foreign visitors in the first nine months of 2019, recording an increase of 10.8% Y-o-Y. Apart from the hospitality and hotel industry, Vietnam is now one of the fastest-growing e-commerce markets in Southeast Asia. Amid the COVID pandemic, more and more consumers opted to shop online, boosting demand for cold storage warehousing for food and other essential goods. E-commerce needs storage space three times larger than traditional logistics activities. As per industry sources, both domestic and foreign investors have targeted healthcare logistics, as they will need more refrigerated warehouses to meet the rising demand for temperature-sensitive products like food, medicine, and COVID-19 vaccines. In the retail sector, Ho Chi Minh city is expected to have over 200,000 sq. m. of new retail spaces by 2023, both in CBD and non-CBD areas. Categories such as F&B and health & beauty will continue to expand on retail podiums.

Vietnam’s industrial property market has performed well and is expected to grow. While Samsung Electronics has a massive factory covering 67,088 sq. m. in Ho Chi Minh City, Apple Inc. has plans for further expansion in the country. As Vietnam is set to become the new manufacturing hub in Asia, the industrial property market has outperformed other commercial property sectors. In the first three quarters of 2020, almost 47% of all foreign direct investments (FDI) were allocated to the manufacturing industry.

Competitive Landscape

The Vietnamese real estate market is fairly fragmented due to the presence of many local and global players in the market. Vietnam real estate includes pure Vietnamese capital-based local companies and foreign investment funds from foreign companies and joint venture firms.

Various proptech startups and traditional real estate firms are aiming to leverage technology to improve their operations and competitive edge by providing effective solutions to enhance home buying, selling, renting, and living experiences in Vietnam.

In hospitality real estate, there is a need for developers in Vietnam to diversify the market by paying attention to the non-traditional market and bringing in professionals to manage their property. There is a growing demand for quality office and retail stock in centralized places, with the Hanoi CBD in focus. The strength of the manufacturing and tourism sector will keep demand buoyant for retail, office, and industrial units.

Key players in the residential real estate market are Novaland Group, Dat Xanh Group, FLC Group, Hung Thinh Real Estate Business Investment Corporation, and Nam Long Investment Corporation.

Additional Benefits:

  • The market estimate (ME) sheet in Excel format
  • 3 months of analyst support

This product will be delivered within 2 business days.

Table of Contents

1.1 Study Deliverables
1.2 Study Assumptions
1.3 Scope of the Study
4.1 Current Economic Scenario and Consumer Sentiment
4.2 Real Estate Buying Trends - Socioeconomic and Demographic Insights
4.3 Government Initiatives, Regulatory Aspects for Real Estate Sector
4.4 Insights into Existing and Upcoming Projects
4.5 Insights into Interest Rate Regime for General Economy and Real Estate Lending
4.6 Insights into Rental Yields in Real Estate
4.7 Insights into Capital Market Penetration and REIT Presence in Real Estate
4.8 Insights into Public-private Partnerships in Real State
4.9 Insights into Real Estate Tech and Startups Active in Real Estate Segment (Broking, Social Media, Facility Management, Property Management)
4.10 Impact of COVID-19 Pandemic on Real Estate Market in Vietnam
5.1 Market Drivers
5.2 Market Restraints
5.3 Market Challenges
5.4 Porter's Five Forces Analysis
5.5 Industry Value Chain/Supply Chain Analysis
6.1 By Type
6.1.1 Residential
6.1.2 Retail
6.1.3 Logistics/Industrial
6.1.4 Hospitality
6.1.5 Office
6.2 By Value
6.2.1 Premium
6.2.2 Luxury
6.2.3 Affordable
6.3 By Key Cities
6.3.1 Ho Chi Minh City
6.3.2 Hanoi
6.3.3 Quang Ninh
6.3.4 Da Nang
7.1 Market Concentration
7.2 Company Profiles
7.2.1 Vingroup
7.2.2 Dat Xanh Group
7.2.3 FLC Group
7.2.4 Toong
7.2.5 Nam Long Investment
7.2.6 Sun Group
7.2.7 Colliers Internatio
7.2.8 Novaland Group
7.2.9 Hung Thinh Real Estate Business Investment Corporation
7.2.10 Phat Dat Corporation?
7.2.11 Vinhomes?*

Companies Mentioned

A selection of companies mentioned in this report includes:

  • Vingroup
  • Dat Xanh Group
  • FLC Group
  • Toong
  • Nam Long Investment
  • Sun Group
  • Colliers Internatio
  • Novaland Group
  • Hung Thinh Real Estate Business Investment Corporation
  • Phat Dat Corporation​
  • Vinhomes​*