FOREIGN INVESTMENT IN VIETNAM’S REAL ESTATE MARKET BECOMES INCREASINGLY SELECTIVE

Real Estate Remains a Key Sector for Foreign Investment

Of the total realized FDI, the real estate business accounted for approximately 7.4%, equivalent to nearly US$965 million.

When newly registered and adjusted investment capital are combined, the real estate sector attracted approximately US$5.1 billion, representing nearly 18% of total registered FDI.

These figures highlight the continued appeal of Vietnam’s real estate market to international investors. However, the Ministry of Construction noted that foreign capital is becoming increasingly selective in terms of asset quality and operational potential.

Large-scale projects with transparent legal status, strategic locations and stable operating prospects are gaining greater attention. These include urban developments, residential projects, industrial real estate, logistics facilities, offices and hotels.

Industrial and High-End Hospitality Assets Gain Investor Attention

Michael Piro, CEO of Indochina Capital, said that industrial real estate and high-end hospitality are currently among the segments attracting strong interest from foreign businesses.

In the industrial real estate sector, the diversification of global supply chains under the “China + 1” strategy continues to strengthen Vietnam’s position as a strategic manufacturing destination in the region.

At the same time, major infrastructure investments are improving connectivity between economic centers, industrial zones and urban areas. Several major infrastructure projects in Hanoi and neighboring provinces are expected to create additional momentum for industrial real estate, logistics and surrounding urban developments.

According to Michael Piro, demand for ready-built factories that meet ESG standards is increasing, particularly among international technology corporations and companies involved in the semiconductor supply chain. Projects such as Core5 Vietnam illustrate the growing demand for industrial assets that meet higher standards for operations and sustainable development.

International Brands Support the High-End Hospitality Market

In the hospitality and hotel segment, the luxury market has shown positive signs, supported by partnerships between domestic developers and leading international hotel management brands.

The participation of global hospitality brands not only contributes to higher service standards but also enables projects to access international customer networks with greater spending power.

One example is Wink Hotel Hanoi Westlake, which is expected to launch toward the end of this year and join the Unscripted by Hyatt system.

According to Michael Piro, the growing presence of international brands is also encouraging domestic businesses to raise their service standards while creating greater opportunities to attract international visitors.

Foreign Investors Are Shifting Toward Larger, Strategic Projects

John Campbell, Head of Industrial Services at Savills Vietnam, said that FDI trends during the first half of the year reflect a notable shift in foreign investment strategies.

Although the number of new projects declined significantly, the scale of FDI increased substantially. This suggests that foreign investors are moving away from small, fragmented investments toward large-scale, high-tech projects with long-term strategic value.

Infrastructure development is also becoming an increasingly important factor in expanding the geographical scope of investment opportunities.

In southern Vietnam, projects such as Long Thanh International Airport, Ring Road 3 in Ho Chi Minh City and the Cai Mep–Thi Vai port complex are expected to improve connectivity with key industrial and logistics corridors. Better accessibility could further support FDI flows into industrial real estate, logistics and surrounding urban developments.

As new economic centers emerge, demand is also likely to expand into residential properties, offices, retail, hospitality and other real estate segments.

Transparent Regulations Are Critical to Attracting Quality FDI

To strengthen Vietnam’s appeal to international capital, experts believe the country should continue improving the legal framework governing land, investment and project development.

According to John Campbell, foreign investors place particular importance on regulatory transparency and the time required to bring a project into operation. A clearer legal framework and more efficient approval procedures would allow investors to better manage project timelines, costs and business plans.

In addition to improving administrative procedures, attracting high-tech industries and activities with greater value-added potential is considered important for improving the overall quality of FDI entering Vietnam.

Investors Should Prioritize Income-Producing Assets

For foreign businesses exploring opportunities in Vietnam, Michael Piro recommends prioritizing completed assets with clear legal status and high occupancy rates to support relatively stable cash flows.

Rather than focusing primarily on land speculation, investors may consider operating assets or projects with clearly defined revenue-generating potential. Mergers and acquisitions (M&A) and joint ventures (JVs) can also provide effective entry strategies, allowing foreign businesses to access the Vietnamese market while reducing some of the risks associated with entering and developing projects independently.

Overall, the FDI landscape in Vietnam’s real estate market appears to be shifting from a focus on asset acquisition toward operational performance and real value creation. This trend could contribute to a more transparent, professional and sustainable development trajectory for the market in the years ahead.