According to the General Statistics Office (GSO), the total value of capital contributions by foreign investors in 2018 was $9.89 billion, an increase of 59.8 per cent compared to 2017. Disbursed FDI in Vietnam hit $19.1 billion, an increase of 9.1 per cent over the previous year.

The strong rise of FDI inflows into Hanoi has triggered the development of premium serviced apartments. / Photos: Media Max

A considerable number of high-class personnel have, therefore, relocated to Vietnam for work, the vast majority of whom are managers, specialists, or key personnel of multinational corporations, contract consultants, and foreigners working for ODA projects, NGOs, or banks. The GSO also reported that the number of foreign workers in Vietnam has been on the rise, with an average increase of 8 per cent each year since 2008.

Colliers International showed in 2018 that the capital of Vietnam is exhibiting its potential as a favorable investment destination for multinational corporations, embassies, and international organizations.

The Hanoi Promotion Agency (HPA) indicated in December that the city topped the country in attracting FDI last year, with approximately $6.5 billion, a 189 per cent increase compared to 2017 and exceeding the yearly plan by 185 per cent. Japanese investors accounted for 29 per cent.

The strong acceleration of FDI inflows to Hanoi has heated up the premium serviced apartment market. Ms. Do Thu Hang, Deputy Director of the Research Department at Savills Vietnam, said the serviced apartment segment has had stable occupancy rates of 80-85 per cent but recently exceeded 90 per cent, which indicates greater potential in the years to come.

Reports on Hanoi’s real estate market in the fourth quarter of last year from Savills Vietnam showed that the positive performance in the serviced apartment segment was reinforced by rising demand among both local people and foreigners. Average rents were $25 per sq m per month, a rise of 5 per cent year-on-year, while average occupancy remained at 86 per cent.

My Dinh’s increased popularity among South Korean and Japanese expats

South Korea is the largest of the 129 countries and territories investing in Vietnam, with registered capital of $61.08 billion, accounting for approximately 18.3 per cent of the total. Japan follows, with $55.84 billion, or 16.7 per cent, then Singapore, Taiwan, and Hong Kong. According to Savills, the number of South Koreans living and working in Vietnam has increased nearly 50-fold (approximately 100,000) in less than a decade. The lion’s share resides in the country’s two biggest cities - Hanoi and Ho Chi Minh City.

The rising wave of workers moving to Hanoi from Northeast Asian countries has leveraged the demand for rentals and homes.

The most-crowded Japanese neighborhoods used to lie between Kim Ma, Linh Lang, and Dao Tan streets in Ba Dinh district, where The Japan Foundation Center for Cultural Exchange and the Embassy of Japan in Vietnam are located.

However, the establishment of the Japanese School of Hanoi and numerous Japanese companies in My Dinh over recent years has been a game changer. This has created huge demand for housing rentals in the area, as more Japanese businesspeople, specialists, and professors relocate for work.

Hur Yo Han’s family rents an apartment in My Dinh.

“My three-bedroom, 110 sq m in size, generally generates $1,200-1,600 a month,” said Ms. Mai Huong, who rents three serviced apartments to Japanese expatriates in My Dinh and lives in Nam Tu Liem district. “The duplex unit is in a prime location with a wide range of amenities, so the rental fee is also higher, at approximately $2,000 a month. Many real estate brokers contact me but the apartments are fully occupied already.”

Not only Japanese but also South Korean expatriates are flocking to My Dinh. Trung Hoa - Nhan Chinh has been known as a popular Korean neighborhood for the last ten years or so due to the predominance of Korean restaurants, supermarkets. and grocery stores along Tran Duy Hung, Nguyen Thi Dinh, Nguyen Thi Thap, and Hoang Ngan streets. Korean food as diverse as noodles, canned food, snacks, and Soju is easily obtainable in nearby supermarkets and stores. Many local people speak Korean and karaoke services are available in the language.

While Trung Hoa - Nhan Chinh attracts people from all walks of life, My Dinh - Me Tri has recently emerged as a new center for South Korean intellectuals and the middle and upper class. Waiters and staff at local restaurants or malls are able to communicate with customers in Korean. Shops, eateries and salons in the area are more high-end and less busy. The pace of living in the neighborhood is therefore rather laid-back.

Hur Yo Han, a South Korean expert working for Hyundai, has lived in Vietnam for eight years and even married a Vietnamese woman. They are now renting an apartment in a premium complex in My Dinh after a period of time living in Trung Hoa - Nhan Chinh. “There are more and more managers and experts moving from South Korea to Vietnam for work,” he said. “We have a community on Facebook and KakaoTalk to support other South Korean expatriates in Hanoi and throughout Vietnam. My Dinh has become a popular option when it comes to housing rentals.”

“We tend to go for fully-equipped apartments with high security and privacy,” he went on. “South Koreans generally are not reluctant to relocate if better accommodation is available, with a wider range of amenities, reasonable rentals, and airy common spaces, etc. My Dinh is a new urban area that is not too busy or crowded. Transportation is convenient, and local facilities and infrastructure such as supermarkets, schools, and hospitals are all easily accessible. Therefore, new properties in My Dinh will certainly be top of mind for new South Korean expatriates in Hanoi.”

Despite its strong attraction, My Dinh experiences a shortage in the supply of premium apartments, which may result in local scarcity due to increasing demand for high-end housing in the area. Notably, the demand for rentals and homes is expected to surge as Samsung’s R&D center comes into operation this year. This creates huge opportunities for developers to invest in high-end housing developments.

VN Economic Times