Published on and written by Cyril Jarnias
Micro-Apartments: An Innovative Solution to Urbanization in Vietnam
Amid rapid urbanization and increasing population density, Vietnam is witnessing an emerging trend in housing: micro-apartments. These dwellings, often called “one-room apartments,” provide an ingenious response to economic challenges across the country.
With smartly optimized space, they combine practicality and comfort, becoming a popular solution for households with limited budgets.
As cities like Hanoi and Ho Chi Minh City experience continuously rising rents, these small residential units present an attractive alternative for many urban dwellers seeking to settle near city centers while maintaining reasonable costs.
Good to Know:
Micro-apartments are particularly suitable for young professionals and small households seeking affordable downtown housing.
Microliving: A Booming Trend in Vietnam
Economic and Social Factors Driving Microliving Growth in Vietnam:
- Rapid urbanization: Major cities like Ho Chi Minh City and Hanoi are experiencing sustained population growth, particularly due to influxes of young workers and students from provinces coming to work or study.
- High real estate costs: Purchase and rental prices in urban centers continue to climb, making property ownership or spacious housing difficult for many households, especially young professionals and middle-to-low-income families.
- Lack of affordable housing supply: The shortage of social and commercial housing projects over more than a decade has pushed a significant portion of the urban population toward alternative solutions like mini-apartments or microliving.
Microliving as a Practical Solution:
- Financial accessibility: Mini-apartments represent an affordable option, often located near economic or university hubs.
- Flexibility: Young professionals and students favor renting or buying small spaces for their easy maintenance and adaptability to mobile or temporary lifestyles.
- Strategic location: These dwellings, often situated in central neighborhoods or near public transportation, offer a compromise between cost and proximity to essential services.
Examples of Smart and Multifunctional Layouts:
| Layout Solution | Description | Main Advantage |
|---|---|---|
| Foldaway furniture | Murphy beds, folding tables | Space saving |
| Built-in storage | Under-stair closets, bench drawers | Volume optimization |
| Modular partitions | Flexible separation of living areas | Space versatility |
| Compact kitchens | Miniaturized appliances, sliding countertops | Maximum functionality |
- Use of light colors and mirrors to visually enlarge space.
- Integration of smart home solutions for remote lighting and ventilation control.
- Shared common spaces (gyms, laundry rooms, terraces) to compensate for compact private units.
Challenges Related to Growing Microliving Popularity:
- Living comfort: Limited space can compromise privacy, well-being, and quality of life, especially long-term or for families.
- Sustainability: Neighborhood densification through unregulated construction poses problems regarding fire safety, ventilation, natural light access, and waste management.
- Legal and technical risks: The absence of clear legal frameworks for some mini-buildings exposes occupants to uncertainties about ownership, building compliance, and safety.
Microliving is establishing itself as a pragmatic response to Vietnam’s urban housing crisis, but its widespread adoption raises significant comfort and sustainability issues that call for ongoing regulations and innovations.
Good to Know:
In Vietnam, microliving is gaining popularity due to rapid urbanization and high real estate costs in cities like Ho Chi Minh City and Hanoi, making traditional housing inaccessible for many young professionals and students. These micro-apartments offer an affordable solution by providing well-located spaces, often in the heart of urban activities. Designers optimize these small areas through clever layouts, such as transformable furniture or built-in storage, maximizing available use without sacrificing comfort. However, the growing appeal of microliving poses challenges in terms of long-term comfort, particularly adapting to confined spaces, and raises questions about the ecological sustainability of these high-density residential projects.
Benefits of Micro-Apartments for Investors
Micro-apartments in Vietnam represent a particularly attractive investment opportunity for several reasons:
- Growing demand for affordable housing in urban areas
- Intense urbanization in Ho Chi Minh City and Hanoi has led to rapid real estate price increases: apartment prices in Hanoi surged 40-50% between 2023 and 2024, while in Ho Chi Minh City, the average square meter reached nearly 76 million VND (approximately $3,000 USD), representing an annual increase of nearly 24%.
- The average housing cost in Vietnam increased over 32% year-over-year. This surge makes traditional housing unaffordable for many, fueling demand for more compact and affordable solutions.
- Lower relative cost of micro-apartments and high return on investment
| Apartment Type | Average Price (USD/m²) | Potential Profitability |
|---|---|---|
| Micro-apartment | ~1,500–2,000 | High |
| Standard apartment | ~3,000 | Moderate |
– Micro-apartments require less buildable space, reducing initial costs. Consequently, even with lower monthly rent than conventional apartments, the yield-to-cost ratio is often higher.
– New real estate regulations also promote market transparency and further secure rental investments.
- Appeal to young professionals and students
Key points regarding the rental target:
- Urban young adults seeking independence but with limited budgets
- Students coming to study in university metropolises
- Internal migrant workers seeking flexibility
This population is growing rapidly due to Vietnam’s economic dynamism, constituting a stable and renewed tenant pool for this housing type.
Concrete Examples:
Developers like Novaland or Vinhomes have successfully integrated blocks dedicated to studios/micro-units in their recent projects located near university hubs or business districts.
Some local institutional investors have achieved occupancy rates exceeding 95% in this segment since late 2023.
Key Benefits Summarized as a List:
- Easier access to the real estate market due to low entry cost
- High occupancy rates guaranteed by structural urban demand
- Attractive gross yield compared to other conventional residential segments
- Flexibility during repositioning or resale due to large buyer/tenant pool
⬛️ Micro-apartments combine financial accessibility for occupants with optimized profitability for investors in a context where the need for affordable urban housing continues to grow.
Good to Know:
Micro-apartments in Vietnam are viewed as an attractive investment due to growing demand for affordable housing, particularly in urban areas where the real estate market is experiencing strong growth. According to a recent study, square meter prices climbed 10% in major cities like Hanoi and Ho Chi Minh City. With relatively low construction costs for micro-apartments, investors benefit from high potential returns. These apartments particularly attract young professionals and students, a stable and expanding rental target. For example, developers like Nova Group have successfully captured this booming market, recording high occupancy rates in their micro-housing projects.
Yield and Profitability of Small Spaces in Vietnam
Growth of Vietnam’s Micro-Apartment Market
Vietnam’s real estate market is experiencing notable expansion, although specific statistics for micro-apartments remain scarce. In 2024, over 230 new apartments were offered for sale, eight times more than the previous year. The sales rate for recently launched projects reached nearly 80%. For 2025, the total supply of new apartments in Ho Chi Minh City is expected to reach approximately 2,000 units, reflecting strong sector dynamism.
| Year | Number of Apartments Put on Sale | Growth vs. Previous Year |
|---|---|---|
| 2023 | ~29 | — |
| 2024 | >230 | x8 |
| 2025 Forecast* | ~2,000 | x8 (vs. 2024) |
Economic Factors Influencing Profitability
– Construction costs: Costs remain attractive in Vietnam compared to neighboring markets due to competitive labor and easier access to local materials.
– Average rental prices: Micro-apartments benefit from growing demand among young professionals and expatriates seeking affordable downtown solutions; rents are generally higher per square meter compared to larger apartments.
– Occupancy rates: With the relative lack of suitable supply in major cities and demographic trends (rapid urbanization), occupancy rates often approach or exceed 90%, particularly for well-located products.
- Rapid urbanization
- Active youth seeking flexible solutions
- Lower fixed costs per unit
- Strong liquidity in the rental segment
Financial or Regulatory Incentives
The Vietnamese government is implementing several measures:
– Temporary tax relief for certain innovative real estate developers.
– Occasional regulatory easing regarding minimum housing sizes to encourage the emergence of small spaces adapted to contemporary urban demand.
Additionally, some municipalities offer:
Expedited permit procedures for pilot urban projects incorporating compact housing.
Case Studies and Concrete Examples
In Ho Chi Minh City and Hanoi, several pilot projects have shown record occupancy rates upon delivery. For example:
| Project | Location | Initial Occupancy Rate |
|---|---|---|
| Micro-Living X | Central District HCMC | >95% |
| SmartSpace Y | West Hanoi | >90% |
Groups such as SGO Homes are strongly positioning themselves in this niche with a strategy focused on smart densification.
Challenges Faced by Investors
- Cyclical fluctuations in Vietnam’s real estate market potentially temporarily impacting prices/rental value
- Evolving preferences: gradual shift toward more comfort, sometimes incompatible with overly compact models
- Regulatory risk if sudden tightening of minimum standards or limitations on total “units” allowed in certain neighborhoods
“The segment’s resilience stems as much from its ability to quickly respond to societal changes as from its financial flexibility during downturns. But we must remain vigilant about regulatory risk linked to increased oversight expected post-boom.”
(Mr. Le Dinh Chung – General Director SGO Homes)
Future perspectives according to VARS:
Confirmed bullish expectations until late 2025 thanks to national and regional macroeconomic recovery and continuous multiplication of specialized players.
The sector’s rapid expansion currently offers a favorable environment but requires strategic agility facing emerging structural challenges related to both growing quality expectations and potential future legislative adjustments.
Good to Know:
The micro-apartment market in Vietnam has experienced significant growth in recent years, with a 12% increase in projects between 2020 and 2022. The profitability of these spaces is influenced by relatively low construction costs and competitive rental prices, typically ranging between $200 and $400 per month, with occupancy rates averaging 90%. The Vietnamese government has implemented tax incentives to encourage the development of these compact homes, thus promoting their expansion in major cities like Ho Chi Minh City and Hanoi. Successful examples include the VinCity complex, which quickly attracted young professionals and expatriates. However, investors face challenges such as real estate market fluctuations and evolving tenant preferences, according to real estate experts like Nguyen Tan, emphasizing that innovation and adaptability will be crucial to remain competitive.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
