Mr. Nguyen Van Duc, a real estate broker with many years of experience, commented: Currently, the demand for renting serviced apartments is increasing due to the increasing number of long-term tourists and foreign experts coming to Vietnam to work.

“Most foreign experts prefer to rent serviced apartments because they offer many amenities, like an apartment, with laundry, dining, and cleaning services, not to mention the rental price is cheaper than a hotel…. That’s why the rental price has continuously increased over the years,” Mr. Duc analyzed.

It can be seen that serviced apartments are converging all the elements to enter the “harvest” phase, opening up opportunities for investors who intend to invest in this segment. Especially while there is a “double” price increase from rental prices and increased property value, the supply of serviced apartments is forecasted to remain quite limited in the near future.

A recent survey by Savills Vietnam also shows that not only Hanoi is the location chosen by customers, but the trend of developing serviced apartments has begun to shift to neighboring provinces such as Bac Ninh, Hung Yen and Hai Duong.

In Ho Chi Minh City, the demand for serviced apartments is considered quite diverse and has promoted projects in many different segments, serving many different customer groups.

However, the common point noted is that there is a close relationship between the demand for serviced apartments and the increasing FDI capital flow into Vietnam. Mr. Troy Griffiths – Deputy Managing Director of Savills Vietnam pointed out: The strong growth rate of FDI capital flow into Vietnam in recent years has promoted high demand for the high-quality serviced apartment segment for foreign experts, especially in the last 3-4 years.

Mr. Troy Griffiths analyzed: Vietnam used to be a country that attracted foreign investment thanks to its competitive costs in many fields and factors. Now, FDI has shifted to focusing on server colocation services and supply chain optimization, especially in the electronics industry. This brings greater benefits to the economy. Notably, there will be more foreign managers coming to work and the demand for serviced apartments will also increase.

Savills’ market analysis of growth trends between the two largest cities in the country shows that in Hanoi, serviced apartments are mainly in the A and B segments. Explaining why the demand for this segment is currently expanding to neighboring areas of Hanoi such as Bac Ninh, Hung Yen and Hai Duong, experts say that it is thanks to the development of infrastructure connecting Hanoi and these cities.

It is expected that in the coming time, there will be about 2,000 new serviced apartments from Sun Group Corporation about to launch in Hanoi, accounting for about 30% of the total supply of serviced apartments in this market.

In Ho Chi Minh City, the demand for serviced apartments is more diverse with many projects in the C segment. The group of serviced apartment tenants in Ho Chi Minh City has many income levels, including experts from many different fields and professions, creating many diverse needs.

This is what makes the difference between the serviced apartment market in these two major cities. Another plus point for the serviced apartment type is the stable operation situation. Because even in difficult times like the COVID-19 pandemic, the serviced apartment market still operates well. In Hanoi, prices and performance are almost unaffected. Meanwhile, Ho Chi Minh City has slightly decreased but has now recovered very well.

Ms. Cao Thi Thanh Huong, Senior Manager of Savills Ho Chi Minh City Research, shared that with high demand for affordable accommodation, studio and one-bedroom apartments are always the choice. In the past 5 years, Savills recorded 1,849 apartments from 48 new Grade B and C projects. Developers focused on developing studio and one-bedroom apartments with 85% market share of new supply.

However, future supply in Ho Chi Minh City is expected to be limited. By 2025, there are 5 projects expected to join with about 500 units; of which, up to 63% will be located in District 1 with 3 projects of class B and C. The rental capacity of the serviced apartment segment in this city is currently at 79% with an average rental price of about 513,000 VND/m2/month and increasing slightly by quarter.

Rents for 14 Grade A and B projects increased by an average of 3% quarter-on-quarter as rents became more fixed and developers stopped offering incentives. Of these, 9/14 projects, accounting for 74% of supply, achieved relatively high occupancy rates of 80% or more.

However, experts also warn that in the coming time, the demand for long-term accommodation from businesses will remain stable, but the growth of serviced apartments will have to compete fiercely with commercial apartments for rent, especially in the Ho Chi Minh City market.

In the South, the main tenants of the serviced apartment segment are foreign experts working in industrial parks and enterprises in Ho Chi Minh City, Long An, Dong Nai and Binh Duong. To optimize capacity, projects flexibly combine both long-term and short-term rentals.

Assessing the profits from renting serviced apartments, Ms. Duong Thuy Dung, Senior Director of CBRE Vietnam analyzed: Currently, the expected profits of the rental apartment segment bring in 6-6.5%/year for investors. However, few investors achieve 6.5%/year because the competition in the apartment rental market is increasingly fierce, and apartment tenants are increasingly differentiated.