The occupancy rate for the segment was 77%, according to property consultancy Avison Young.
But in the high-end segment saw rents remained steady at $35 while occupancy was 82%.
Data from property consultancy Savills shows overall serviced apartment rents rose by 5% year-on-year to $23 before value-added tax.
The average occupancy was 86%, a 2-percentage-point increase from the last quarter of 2024.
The demand for serviced apartments is driven by the development of industrial zones and the foreign direct investment they are attracting, Matthew Powell, director of Savills Hanoi, explained.
Nearly $1.5 billion worth of FDI has come this year, a 31% rise from the same period last year.
Powell said experts from Japan and South Korea employed at enterprises, embassies, international banks, and industrial zones are the primary customers for serviced apartments.
With limited supply in nearby industrial areas like Hai Phong, Bac Ninh and Hai Duong, Hanoi remains the top choice for foreigners seeking high-quality accommodation.
Avison Young analysts said the recovering tourism industry is also bolstering the serviced apartment market.
In the first quarter Hanoi received an estimated 7.3 million tourists, up 8.7% year-on-year.
As international visitors increasingly favor flexible accommodation, projects offering amenities like swimming pools, gyms, reception services, and 24/7 security are becoming top choices.
Improved infrastructure like ring roads and expressways and transportation facilitate easy travel between the city and industrial zones, further driving demand for serviced apartments in Hanoi.
But the market faces potential challenges such as the U.S.’s tariffs, which can hurt foreign capital inflows, impacting industrial zones, commercial services and accommodation demand.
“If the tax is applied, it will create short-term concerns for foreign enterprises operating in Vietnam,” David Jackson, general director of Avison Young Vietnam, said.
“Instead of expanding investments, they are likely to delay and monitor the situation.”
But he remained optimistic, pointing out that foreign investors are likely to have contingency plans and long-term strategies.
Lessons learned during the Covid-19 pandemic have made businesses cautious about inventory and production management to prevent disruptions when logistics costs rise.
Savills experts said Vietnam offers long-term advantages for foreign investors, driven by government reforms to streamline administration and simplify investment procedures and investments in major projects like the North-South Expressway and the Hai Phong-Hanoi-Lao Cai railroad.
The supply of serviced apartments is projected to grow. Savills reported that seven apartment projects are slated for completion in Hanoi this year with over 1,000 units, mostly in the inner city.
