VIETNAM’S EMERGING REAL ESTATE OPPORTUNITY: WHY INVESTORS SHOULD CONSIDER STUDENT HOUSING AND SENIOR LIVING
In the landscape of escalating volatility in traditional markets, the imperative for diversification had become more than a strategy—it was a necessity. As global economies faced increasing instability and market dynamics shifted unpredictably, investors were forced to reconsider the traditional paradigms of portfolio management. The Alternative Assets Symposium, hosted by Arcadia Consulting Group in collaboration with the Vietnam Real Estate Investors Network (VREIN) and Sedona Suites Ho Chi Minh City on September 26, addressed this growing sentiment head-on.
Vietnam’s Purpose-Built Student Accommodation (PBSA) and Senior Living sectors present unique opportunities for local developers and opportunistic investors. While these markets offer promising first-mover advantages, they also come with inherent risks that require careful navigation. For those ready to embrace these challenges, the potential rewards could be significant.
Student Housing: Strong, Rising Demand and Strategic Risks
Vietnam’s education sector is experiencing remarkable growth. With a population nearing 99.7 million as of September 2024, over 5 million students are expected to enter higher education soon, driven by increasing incomes and urbanization. Demand for student housing is rising sharply. However, universities currently cannot accommodate a significant portion of these students, highlighting a pressing need for private investment in the PBSA market, which remains underdeveloped.
Government spending on education increased by 15% in 2024, reflecting a clear commitment to this growing sector. Despite this, the accommodation shortfall remains significant, creating a ripe opening for private sector involvement investment. However, this is not a straightforward opportunity. Investors must adopt a long-term, adaptable strategy for profitability.
While PBSA has established itself as a successful asset class in markets like the UK, Australia, and the US, the Vietnamese landscape poses unique challenges. Properties near universities are scarce, and while the adaptive reuse of existing buildings might seem feasible, the costs associated with compliance—especially fire and safety standards—can be high. Investors will need to offer modern amenities that resonate with Vietnam’s tech-savvy student population, including high-speed internet and efficient property management systems. These features are essential for tenant retention and competitive pricing.
Senior Living: A Future-Ready Investment
While Vietnam population is youthful, many other Asian countries are ageing rapidly. By 2030, just six years’ time, there will be more aged persons in Asia than in the US and Europe combined. These baby boomers who are in the late 60s to 70s have worked hard, are better educated, more informed and have the savings to enjoy themselves, live better and age well.
“We believe their consumption pattern is going through an inflexion, and they are increasingly willing to spend more on themselves before frailties and infirmity involuntarily changes their life. We believe Vietnam has the potential to become a destination of choice for these seniors from overseas to arbitrage their strong currencies and high cost of living in their respective matured cities to enjoy, to live better and age well in Vietnam, for a period of their silver and golden years,” says Chia Boon Kuah, Senior Advisor at Arcadia Consulting Group, Former President of the Real Estate Developers Association of Singapore.
Vietnam has the hands, heart, hospitality, care continuum, land, culture, history, weather, range accommodation, services and price points to attract middle and upscale seniors from Asia and beyond in the coming years. The current available residential inventory in key cities in Vietnam presents timely opportunities for developers and landowners to consider harvesting from this ageing mega trend in Asia and beyond, to create and add new value to their assets, through repurposing and green field projects
There is strong awareness and interest from private funds and wealthy family offices to invest in this mega trend. Thailand, Malaysia, Indonesia and Cambodia are doing their part to carve out their share of this huge growing market through policy facilitation.
A Long-Term, Strategic Approach
Vietnam’s GDP is projected to grow at 6-7% annually, and its expanding middle class is driving demand for both higher education and quality eldercare. Despite the strong fundamentals, institutional investors must weigh these opportunities against the risks posed by inflation, regulatory uncertainty, and market immaturity.
For early movers willing to adopt a hands-on approach, the rewards could be substantial. Working closely with local governments to shape evolving regulatory frameworks and understanding the cultural sphere will be crucial for long-term success. As Townsend notes, “Investors need to be realistic about Vietnam’s potential. The fundamentals are strong, but the market is immature. Success will require hands-on management, local expertise, and a patient, long-term strategy.”
About Arcadia Consulting Group
Arcadia Consulting is a boutique real estate brokerage and advisory firm. We specialize in the marketing of exclusive local and international developments, luxury residences, investment sales brokerage, and deal sourcing. Our services enable our clients to make informed decisions about the portfolio they own, the properties they are considering investing in or the buildings they occupy. Arcadia Consulting’s diverse and deep experiences enhance the property advice we offer, empowering our clients to make the right and timely choices for their real estate. We are operating in Singapore and Vietnam. For further information and inquiries, please visit our website https://arcadia-consult.com/ or e-mail us at rs@arcadia-consult.com.vn
