Commentary

New housing concepts rise amidst Vietnam’s price surge

As Vietnam's apartment prices rise, new concepts like leasehold apartments, senior housing, and student housing emerge to address affordability concerns.

November 15, 2024

Vietnam's real estate market has undergone significant transformation over the past five years, with apartment prices in major cities like Ho Chi Minh City (HCMC) and Hanoi (HN) rising remarkably. While this trend poses affordability challenges for young professionals and first-time homebuyers, it has also paved the way for innovative solutions and new asset types that are reshaping the country's real estate landscape.

Figure 1: Average Primary Apartment Selling Price in HCMC and Hanoi (USD per sqm)

Source: JLL Research

The apartment prices in Vietnam's urban areas are constantly rising, driven by rapid urbanisation, economic growth, and limited developable land. This increase has created affordability challenges for many Vietnamese citizens. In response, alternative housing models like 50-year ownership apartments have emerged as a potential solution. Recent successful launches, such as SOHO Heritage West Lake project by Capitaland in Hanoi, show growing interest in this concept. These properties offer a more affordable entry point into desirable locations, appealing to the younger cohorts who are more open to new ownership models. Despite the shorter tenure, this concept has potential as the residential market evolves and freehold apartment prices continue to climb.

Beyond the general 50-year ownership concept, the evolving market has also given rise to specialised housing types tailored to specific demographic needs. Two notable concepts are senior homes and Purpose-Built Student Accommodation (PBSA), both of which can be offered under the 50-year ownership structure.

  • Senior homes cater to Vietnam’s increasing elderly population, providing tailored amenities and services that support comfortable and independent living for older adults. These developments often feature on-site medical facilities, communal spaces for socialising, and age-friendly design elements. By offering these properties under a 50-year ownership model, developers can make them more affordable and attractive to retirees or their families looking to invest in long-term care solutions.

  • Similarly, PBSA addresses the growing demand for quality student housing in Vietnam's major educational hubs. These facilities offer students a safe, convenient, and community-oriented living environment, often at a more affordable price point than traditional apartments. The 50-year ownership model allows investors, including students’ parents, to secure accommodation for the duration of their children’s studies. This model also provides potential housing options beyond their studies, without the high costs associated with freehold properties.

Figure 2: New sectors, opportunities and drivers

Source: JLL Research, Oxford Economics, Temasek

The introduction of these new asset types and ownership models represents a significant opportunity for Vietnam's real estate sector. It enables greater market segmentation, catering to diverse needs and financial capabilities. Moreover, it contributes to the overall development of urban areas by promoting mixed-use communities and supporting the needs of different demographic groups. As Vietnam continues to urbanise and its economy matures, the demand for innovative housing solutions is likely to increase. Developers, investors, and policymakers must collaborate to ensure these new asset types are developed responsibly, focusing on quality, sustainability, and long-term community benefits.