Great potential for luxury goods in Vietnam
Vietnam currently has five USD billionaires and may have six by 2025. With the rise of the rich, the Vietnamese market will be a fertile land for luxury brands.
The third Prestige 520 luxury yacht priced at least VND 33 billion (over $1.4 million) was recently handed over to its owner in HCM City. Other brands of yachts worth millions of US dollars have been purchased by wealthy people in Vietnam. Some Vietnamese tycoons own 2-3 yachts.
Many super luxury cars worth over $1 million were imported to Vietnam in 2021. Bentley introduced the super-luxury sedan Flying Spur V8 First Edition 2021 in Vietnam last June, priced at VND 18-21 billion (nearly $1 million).
In the last days of 2021, a Maserati dealer announced orders for the MC20 supercar model. This model costs from VND 16.5 billion.
In early December, the new generation Rolls-Royce Ghost was officially delivered in Vietnam, at the starting price of VND 30 billion.
Besides yachts and luxury cars are million-dollar real estate. In 2021, the luxury real estate market witnessed many projects priced at par with major markets such as Hong Kong and Singapore.
The super-luxury Grand Marina Saigon project located in the "golden land" in HCM City, developed by Masteri Homes Group, is being offered for sale at a rumored price of $15,000-16,000/m2 (not including VAT). With area from 51-106 m2/apartment, the value of an apartment is $770,000-1.7 million.
Another super-luxury project is The Marq, also in HCM City, developed by Hong Kong Land Corporation, is offered for a rumored price of $8,000-10,000/m2. The project consists of 2 blocks of 26 floors, with 515 luxury apartments.
However, the most expensive apartment project is not in HCM City, but in Hanoi. That is The Grand Hanoi project at the intersection of Hang Bai - Hai Ba Trung streets, which is offered for more than VND 700 million-1 billion/m2 (excluding VAT and maintenance fees). The "cheapest" apartment of this project has a total value of over VND 70 billion (over $3 million). However, most of the apartments of The Grand Hanoi sold out very quickly.
In the field of fashion, two watch models 'The Bird Repeater' and 'The Charming Bird', priced at VND 13 billion and VND 11 billion, have been sold in Vietnam.
More super rich
Experts say that Vietnam is one of the few countries with relatively fast economic growth in the past 20 years. Accordingly, the growth rate of the middle, rich and super-rich classes is among the fastest in the world. It is natural that the demand for shopping and consuming branded goods in Vietnam has grown.
Dr. Do Thien Anh Tuan, from Fulbright University Vietnam, said that with the second fastest growth in the number of super-rich individuals in Vietnam in the 2010-2019 period, the Vietnamese middle class will soon catch up with newly industrializing countries (NICs).
Recently, the world's largest real estate consulting firm, Knight Frank, released The Wealth Report, which listed the number of super-rich people in Vietnam. According to the report, Vietnam has 5 USD billionaires and is expected to have 6 billionaires by 2025.
In 2021, due to the impact of the Covid-19 pandemic, the number of people owning $1 million or more in Vietnam decreased slightly compared to 5 years ago, from 20,645 people to nearly 19,491 people, a decrease of 6%. The number of people owning $30 million or more decreased from 405 to 390 people.
However, Knight Frank predicts that Vietnam will have the fastest growth rate of super-rich people in the world, about 31%, in the next 5 years. Specifically, by 2025, Vietnam will have 511 people with assets of over $30 million and 25,812 people with assets of over $1 million. According to this statistic, to get into the top 1% of the richest people in Vietnam, a person needs to have assets of at least $160,000.
Forbes forecast the growth rate of the super-rich in Vietnam to be 170% by 2026. According to RBNC, about 10% of Vietnam's population belongs to the High Earners Not Rich Yet - people with high income but not rich (couples with income about $75,000-250,000/year).
"This is a group of customers who are not rich but want to have high-class experiences," RBNC said.
According to the World Bank, by 2020, the middle class in Vietnam will have about 15 million people, equal to the population of Hong Kong (China) and Singapore combined. This number will increase to 25 million, then 50 million by 2025 and 2045.
The landing of luxury brands
A series of luxury brands have appeared in Vietnam. Gibran Bukhari, Business Manager of Masterise Homes, said that with the rapid increase of the rich class in Vietnam, luxury real estate is facing strong development opportunities, thereby not only enhancing market, but also creating a different image and position of Vietnam in the eyes of international investors.
Ritz-Carlton - one of the most famous and admired brands in the world in the field of luxury real estate - is present in Vietnam. The Ritz-Carlton, Hanoi branded apartment complex will target the markets of China, Hong Kong, Singapore and beyond, Europe and the Middle East. The project is expected to come into operation in the fourth quarter of 2023.
In the fashion field, Hanoi has been home to many luxury brands such as Prada, Hermès, Gucci, Patek Philippe, Cartier... In Ho Chi Minh City, the rich can easily buy products at the stores of Hermès, Louis Vuitton, Chanel, Burberry and Rolex.
Market research company Statista estimates that Vietnam's annual compound growth will reach more than 9% in the next 5 years. The largest share in sales of luxury goods is luxury leather goods, nearly 30%, followed by fashion, accounting for more than 25%, watches and jewelry with 21% and the remaining 24% for perfumes, cosmetics and eyewear.
Mr. Paul Harris, Director of Rolls-Royce APAC, believes that business activities in Vietnam will continue to prosper in the next few years, when Vietnam becomes the site of convergence of luxury cars in the region.
Vietnam pales in comparison with Japan and China in regard to the size of the luxury market, but it has a great potential to become a highly profitable market in the near future.
According to the latest update from Forbes, total assets of the six billionaires in Vietnam as of December 23, 2021 were up to 19.5 billion USD.