Why Vietnam’s serviced apartment sector is poised for growth

The high demand for flexible living arrangements and changing preferences of tourists are key factors.

The serviced apartment market in Vietnam is witnessing significant growth according to a report from Avison Young, fueled by various factors such as a rising influx of expatriates and foreign professionals, driven by increasing foreign direct investment (FDI) and the expansion of multinational companies. 

Rapid urbanisation in major cities like HCMC and Ha Noi further enhances the demand for flexible living arrangements, appealing to both short- and long-term residents. 

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Additionally, the growing tourism sector is making serviced apartments a favoured choice for travellers seeking more spacious and amenity-rich accommodations compared to traditional hotels. With many serviced apartments offering hotel-like amenities—such as gyms, pools, and cleaning services—while providing a homely atmosphere, they cater effectively to both business and leisure guests. 

The shift toward remote work has also led to a preference for these adaptable living spaces. Furthermore, increasing interest from investors in serviced apartments as a viable asset class is driving further development in this sector. 

In the first eight months of 2024, Vietnam attracted over 11.4 million foreign tourists, representing a significant 45.8% increase compared to the previous year. The Asian market continues to be the largest source of international visitors, accounting for more than 9 million arrivals and reflecting a robust 51% y-o-y growth. Meanwhile, the European and Oceania markets also experienced steady increases, with visitor numbers rising by 42.7% (over 1.3 million visitors) and 25.4% (346,500 visitors), respectively. 

These markets are actively engaged in various investment projects in Vietnam, particularly in key sectors like manufacturing and retail. To facilitate the expansion and growth of their brands in the country, local professionals require long-term accommodation to manage project developments and business operations effectively.

Serviced apartment projects are primarily concentrated in major cities like HCMC and Ha Noi, as these areas experience much greater rental demand compared to other parts of the country. International brands are keen to expand in Vietnam's hospitality sector for several compelling reasons, one of which is urbanisation in major cities like HCMC and Ha Noi. This further necessitates more hotels and serviced apartments to cater to both business and leisure travellers. For instance, the aim is to expand its number of hotels and resorts in Vietnam, with over 50 projects currently in development from Marriott International. 

Vietnam aims to welcome 18 million international visitors by the end of 2024. The introduction of electronic visas (evisas) and the extension of visa validity from 45 to 90 days last year have significantly enhanced the tourism sector, drawing in more investors and driving up the demand for long-term accommodations.