Vietnam’s Rental Yields Drop Below 2% Amid Rising Prices
Vietnam’s apartment rental market is experiencing a sharp decline in yields, with most rental returns falling below 2%, according to the Vietnam Association of Real Estate Brokers (VARS).
Key Market Trends:
- Primary apartment prices in Hanoi: 70 million VND/m², up 35% YoY.
- Housing price index: +72% since 2019.
- Rental yields: Below 2%, lower than bank savings rates.
- Rent increases: 10-20% YoY in major cities.
Despite rising rent prices, rental income lags far behind the surge in property values, making buy-to-let investments less attractive.
Table of Contents
High Investment Costs Reduce Profitability
Due to skyrocketing apartment prices, rental yields in Hanoi and Ho Chi Minh City have dropped significantly over the past five years.
Rental Yield Trends:
- Hanoi: 3.7% average rental yield.
- Ho Chi Minh City: 3.6% rental yield.
- Nationwide Price Increase (2019-2024):
- Apartment prices: +59%.
- Rent growth: Only +10-15%.
The result? Investors find it harder to justify rental property investments, shifting focus to resale opportunities instead.
Rising Rents Challenge Affordability for Young Workers
As apartment prices climb, rent affordability is a growing concern, particularly for young professionals and low-income workers.
Current Rental Costs in Major Cities:
- City Centers:
- 1-bedroom: 10-15 million VND/month.
- 2-bedroom: 15-20 million VND/month.
- Suburban Areas: 6.5-15 million VND/month.
- Rent Increases (2023-2024): +10-20%.
With rent consuming 35-50% of monthly income, many young workers struggle to save, leading to a shift towards suburban rentals.
Urban Migration & The Need for Affordable Housing
As rental costs force tenants out of city centers, more workers are relocating to suburban and nearby provinces, where rent is 20-30% cheaper.
- However, this shift presents challenges:
Limited public transportation, increasing commuting costs. - Job accessibility concerns in suburban areas.
- Rising suburban rent prices due to high demand.
Proposed Solutions:
- Government-led rental housing projects for low-income workers.
- Public-private partnerships to develop affordable long-term rental housing.
- Improved infrastructure to support suburban living.
Future of Vietnam’s Rental Market
VARS Recommendations for Investors & Developers:
- Shift focus to affordable housing over high-end developments.
- Consider long-term rental housing models, inspired by Singapore’s HDB scheme.
- Support national rental housing funds for sustainable housing solutions.
Government Initiatives:
- “National Housing Fund” proposed for affordable urban housing.
- New policies to encourage low-cost housing investments.
- Legal framework updates to regulate rental markets and boost accessibility.
With rising demand for affordable rentals, Vietnam’s real estate market must adapt to changing investor and tenant needs, ensuring sustainable urban growth.
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