Impact of the Ukraine War on Vietnam’s Real Estate

Published on October 22, 2025 and written by Cyril Jarnias

Vietnam’s Real Estate Sector Faces Geopolitical Challenges

Vietnam’s real estate sector, which has been booming for years, now faces unprecedented challenges due to the impact of the war in Ukraine. While global attention is focused on the direct economic consequences of the conflict in Eastern Europe, it’s crucial to understand how this distant geopolitical event is influencing the Vietnamese market.

Soaring raw material prices and disruptions in international trade are among the factors redefining the stakes for Vietnamese real estate. By examining the repercussions of this global crisis, this article explores current trends, emerging opportunities, and the challenges that investors and industry professionals must now confront.

Geopolitical Consequences of the Ukraine War on Vietnam

Changes in Vietnam’s International Alliances

Vietnam has historically maintained a privileged relationship with Russia, but the war in Ukraine has pushed Hanoi to adopt a more neutral and balanced stance. The country is strengthening its policy of “omnidirectional balancing” between major powers, prioritizing diplomatic independence and autonomy. For example, the strategic rapprochement with the United States was temporarily slowed after 2022 to avoid compromising its ties with Moscow, before being revived when the international context was deemed more favorable.

• Russia Relations: Maintaining traditional ties but with increased caution.
• US Relations: Temporary postponement of strategic partnership elevation, followed by gradual resumption of discussions.
• General Approach: Emphasis on neutrality and respect for international law to avoid any strong alignment.

Effects on Vietnamese Imports and Exports

The war in Ukraine has disrupted certain essential trade flows for Vietnam:

• Energy:
  • Reduction or fluctuation in crude oil supply from Russia (a major source).
  • Rising global energy prices negatively impacting Vietnam’s trade balance.
• Agricultural Products:
  • Initial decrease in agricultural trade with Ukraine (wheat, corn), followed by gradual recovery in 2024.
  • Increased diversification toward other supplier markets.

Sector	Main Effect	Adaptation
Energy	Volatility/high prices	Seeking alternatives
Agriculture	Decline in Ukraine-Vietnam trade	Diversification

Repercussions on Foreign Investment and Real Estate Market

Global geopolitical uncertainty is pushing some investors to favor Vietnam as a stable destination amid increased risks elsewhere. However:

• Foreign direct investment (FDI) flows are subject to greater sectoral selectivity (manufacturing favored).
• The real estate sector indirectly benefits from this FDI through growing demand for offices/housing suitable for expatriates/foreign companies.

Potential effects:

• Occasional increase in real estate prices in certain key cities.
• Increased regulatory vigilance to prevent speculative bubbles linked to rapid capital inflows.

Regional Political Stability and International Perception of the Real Estate Market

Vietnam’s relative stability compared to its neighbors enhances its attractiveness to international investors, especially in a context where several emerging markets are experiencing tensions or secondary sanctions related to the Russia-Ukraine conflict.

• Enhanced image as a regional “safe haven” for international real estate investments
• Lower perceived risk compared to other exposed Asian economies

Evolution of Vietnam-Ukraine Relations – Vietnamese Diaspora

Diplomatic ties have intensified since late 2023 despite initial commercial slowdown. The Vietnamese diaspora in Ukraine remains affected by the security situation; nevertheless, it plays an important relay role in supporting the gradual recovery of bilateral economic exchanges.

Specific impacts:

• Vietnamese humanitarian support provided to Ukraine
• New commercial opportunities identified through renewed government dialogue

Influence on Real Estate Regulation/Policies in Vietnam

Geopolitical dynamics are prompting Hanoi to strengthen its vigilance regarding:

• Foreign capital entering the real estate sector,
• Financial transparency,
• Control against excessive speculation linked to sudden foreign investment movements caused by global instability.

Expected main directions:

• Potential regulatory tightening concerning land acquisitions by non-residents
• Targeted incentive measures for strategic projects (industrial parks/social housing)

Key Takeaway: All these factors sometimes strengthen and sometimes complicate Vietnam’s real estate attractiveness – which remains dependent on both regional and global contexts as well as adaptive national policies in response to external shocks.

The Impact of the Ukrainian Crisis on the Vietnamese Real Estate Market

The Ukrainian crisis, triggered in 2022, has caused major economic and geopolitical upheavals worldwide. Beyond its direct repercussions on European markets, this crisis also disrupts emerging economies like Vietnam, particularly through rising raw material prices, international financial volatility, and the strategic repositioning of foreign investors.

Economic and Political Factors Influenced by the Crisis:

• Rising Construction Material Prices
  Global logistical disruptions and international sanctions have led to a significant increase in the cost of importing essential materials such as cement, steel, and energy. This inflation translates into a general rise in construction costs in Vietnam.
• Evolution of International Interest Rates
  The global monetary response to inflation – particularly the gradual rise in key interest rates in several major economic zones – makes real estate financing more expensive for both Vietnamese developers and foreign investors.
• Displacement of Foreign Capital
  Geopolitical instability is prompting some international funds to seek greater security in their investments. While some countries perceived as “safe havens” temporarily benefit from an influx of investors seeking land or fiscal stability, others see their relative attractiveness diminish depending on their exposure to global risks.

Impacted Factor	Consequence on the Vietnamese Market
Material Prices	Rising construction costs / project delays
Interest Rates	More expensive credit / decreased accessibility
Foreign Capital Displacement	Fluctuation in direct investments / search for stability

Impact on Foreign Investors:

International investors are cautiously observing the overall rise in macroeconomic risk. Some are redirecting their flows toward Vietnamese real estate, considered resilient due to its strong structural growth; however, many are adjusting their strategy in the face of increased volatility.

• The increased cost of credit sometimes limits their financial leverage.
• High-end segments (luxury/tourism) remain popular but are exposed to more pronounced global cycles.

Summary List:

• Increased consideration of country risk
• Enhanced selectivity in locations (preference for major cities)
• Search for opportunities in hospitality/tourist residential

Strategic Adaptations by Local Real Estate Companies:

Faced with widespread cost increases and new international expectations:

• Systematic budget adjustments on all new projects
• Renegotiation with local/international suppliers
• Diversification toward products better suited to the domestic Vietnamese market to compensate for a potential partial withdrawal of external investors

Professionals report that “logistical delays linked to the war have forced many Vietnamese developers to revise their initial plans and now prioritize much more cautious management.” A financial manager also states: “We have seen an average increase between +8% and +15% in our material budgets since early 2022 – an unprecedented phenomenon that directly affects our profitability project by project.”

Recent Data:

According to several sectoral analyses conducted during 2024–2025:

• Hanoi: temporary decline (-16%) mainly due to international slowdown despite sustained local demand.
• Da Nang & Ho Chi Minh City: continued dynamic growth driven by international tourism (+6%/quarter for HCMV).
• Continuous increase in the number of high-end buyers seeking a patrimonial “safe haven” outside Central/Eastern Europe.

City	Recent Price Growth	Main Trends
Hanoi	Recent decline (-16%)	Less short-term pressure
Da Nang	Moderate increase	Foreign tourist demand
Ho Chi Minh City	Sustained increase (+6%/qtr.)	Rapid post-health crisis recovery

Professionals unanimously emphasize that “the period now requires more than ever operational flexibility and permanent anticipation,” while confirming that “the fundamentally supportive foundation remains intact.”

In summary, while the Ukrainian crisis did not cause a brutal collapse but rather a profound restructuring of Vietnamese real estate dynamics – pushing them toward greater strategic selectivity both on the investor and local operator sides.

Influx of Ukrainian Refugees and Housing Challenges in Vietnam

Influx of Ukrainian Refugees to Vietnam:

Recent statistics indicate that Vietnam has welcomed a limited number of Ukrainian refugees since the conflict began. No comprehensive official data is available on the exact number of Ukrainian refugees in Vietnam, unlike Europe where over 6 million Ukrainian refugees have been registered, primarily in Germany, Poland, and Russia. Flows to Vietnam remain marginal compared to these countries, although it is estimated that the Ukrainian community has experienced notable growth in major Vietnamese cities since 2022.

Housing Market Challenges in Major Vietnamese Cities:

The arrival of Ukrainian refugees, although modest in volume compared to Europe, adds to pre-existing housing market challenges in cities like Ho Chi Minh City and Hanoi:

• Shortage of Affordable Housing: Demand for housing, already exceeding supply in urban segments, has intensified.
• Price Increases: The increase in demand, even marginal, has contributed to slight upward pressure on rents and sale prices, particularly in central neighborhoods and areas near economic hubs.
• Limited Availability: Social and intermediate housing, already scarce, is quickly saturated.

Challenge	Situation Before 2022	Impact of Ukrainian Influx
Rental Prices	Upward trend	Accentuation of increase
Availability	Supply below demand	Increased saturation in some neighborhoods
New Construction	Slow growth, bureaucracy	Accelerated initiatives (see below)

Government and Community Initiatives:

• Government:
  • Temporary provision of public housing or university dormitories for the most vulnerable arrivals.
  • Administrative facilitation for obtaining residence permits and access to private housing.
• Local Communities and NGOs:
  • Establishment of welcome and mutual aid networks.
  • Sponsorship programs to assist with housing search and integration.
• Private Sector:
  • Some real estate agencies offer dedicated services for expatriates and Ukrainian refugees.
  • Development of new real estate projects targeting foreign or international clientele.

Effects on the Local Real Estate Market:

• Prices: Occasional increase in certain neighborhoods popular with expatriates and refugees.
• Availability: Rapid decrease in furnished housing and medium-sized apartments.
• Construction: Acceleration of some residential projects, particularly in suburbs, but delays persist due to administrative complexity.

Cultural and Socio-Economic Impacts:

• Cultural:
  • Enrichment of local diversity through introduction of new Ukrainian cultural, culinary, and artistic practices.
  • Strengthening of intercultural exchanges, particularly in education and community sectors.
• Socio-Economic:
  • Ukrainian refugees, often qualified, contribute to certain professional sectors (education, services, technology).
  • Increased pressure on urban infrastructure (housing, transport, healthcare).
  • Creation of transnational economic networks (import-export, gastronomy, specialized services).

Potential Long-Term Evolution:

• Gradual integration of refugees, especially among younger individuals and families, through Vietnamese language learning and professional insertion.
• Transformation of certain neighborhoods into multicultural hubs, revitalizing the local economy.
• Risk of social tensions if housing pressure intensifies without sufficient supply adaptation.

The influx, although limited, reveals the fragility of the Vietnamese real estate market in the face of even moderate migratory shocks, while offering an opportunity for cultural openness and social innovation for host communities.

Foreign Investments: Vietnam’s Place in the Current Geopolitical Context

Foreign investor interest in Vietnam is experiencing notable growth in the current geopolitical context marked by the war in Ukraine. Tensions in Europe and the search for risk diversification are increasingly prompting international actors to redirect their investment flows toward Southeast Asia. Vietnam stands out as a preferred destination, benefiting from its political stability and economic growth dynamics.

Factors Favoring Vietnam as an Investment Destination:

• Political Stability: the country is perceived as a safe and predictable environment for foreign investors.
• Robust Economic Growth: FDI flows have reached record levels, with an 8.1% year-on-year increase in the first half of 2025 and an unprecedented amount over five years.
• Sectoral Diversification: real estate attracts approximately 24% of foreign direct investments, behind manufacturing and processing.

Effects of European Tensions and the War in Ukraine:

• Uncertainties in Europe are pushing investors to seek alternative markets, less exposed to geopolitical and energy risks.
• Global FDI flows, traditionally directed toward Eastern Europe, are redeploying toward Asian emerging markets, particularly Vietnam.
• Real estate investors are seeking to diversify their portfolios internationally, reducing their exposure to European instability.

Incentives Offered by the Vietnamese Government:

• Partial or total tax exemptions for several years.
• Facilitated access to land for strategic projects.
• Simplified administrative procedures for investment registration.
• Logistical support and dedicated infrastructure in special economic zones.

Key Recent Figures (2025):

FDI Beneficiary Sector	Amount (in billion USD)	Share of Total
Manufacturing and Processing	12.0	56.6 %
Real Estate	5.17	24.0 %
Sciences and Technologies	1.18	5.6 %
Water and Waste Treatment	0.90	4.2 %

Origin of Main FDI Flows:

• Singapore: 21.4% of flows (4.6 billion USD)
• South Korea: 14.3% (over 3 billion USD)
• Other major Asian partners, strengthening their presence through strategic partnerships.

Recent Partnerships and International Agreements:

• Strengthened cooperation with Singapore, South Korea, and Japan in real estate, infrastructure, and high-tech sectors.
• Signing of free trade agreements and bilateral agreements aimed at facilitating capital flows and investment protection.

Consequences for International Real Estate Investors:

• Portfolio diversification: Vietnam becomes a preferred option to reduce dependence on European markets.
• Search for yield in a less geopolitically exposed environment.
• Growing interest in residential, commercial, and industrial segments, driven by rapid urbanization and population growth.

Key Takeaway:

In the context of global uncertainty and tensions in Europe, Vietnam is establishing itself as a strategic alternative for foreign investors, driven by its stability, fiscal incentives, and affirmed openness policy. The real estate sector, in particular, benefits from this repositioning of FDI flows, reinforced by dynamic international partnerships.