Living Sector: When Market Entry Routes Prove Decisive

The living sector comprises residential real estate that is invested in, owned and operated to generate stable income from rental activity, commonly known as residential income properties. Across Asia Pacific, the segment is attracting growing interest as investors move from a develop-to-sell mindset towards the long-term ownership and operation of assets. Which models fall within this asset class, how strong is demand in Viet Nam, and how should investors enter the market? This article explains the concept and models of the living sector, signals of rental demand in HCMC and Ha Noi, and the market entry strategies available to investors. 

Table of CONTENTS 1. What is the living sector? Definition and residential income property models 1.1 Definition of the living sector 1.2 Models within the living sector 2. Demand for the living sector in Viet Nam 2.1 Serviced apartment demand in HCMC and Ha Noi 2.2 Affordability and demand for long-term rental housing 2.3 A fragmented market: challenges and opportunities 3. Market entry strategies for the living sector in Viet Nam 3.1 Repositioning existing assets 3.2 Investing in operating platforms 3.3 Developing to hold and operate over the long term Conclusion Frequently asked questions

1. What is the living sector? Definition and residential income property models

1.1 Definition of the living sector

The living sector refers to residential real estate that is invested in, owned and operated primarily to generate cash flow from rental activity. The value of an asset lies not only in the sale price of individual units, but also in its ability to sustain rental occupancy, control operating costs and deliver stable income over the long term. For this reason, these assets are also known as residential income properties.

Unlike the build-to-sell model, where developers typically recover their capital when units are handed over to buyers, residential income properties focus on holding and operating the asset. Investors therefore need to consider location, product design, amenities, management quality and the tenant experience together, as these factors directly affect operating performance. The same building can generate very different levels of income depending on how well it is run.

1.2 Models within the living sector

The living sector encompasses a range of rental housing models that meet the needs of different resident groups. Each model has its own tenant profile, form of accommodation and operating approach, which gives the residential income property segment its diversity.

• Student housing: purpose-built accommodation designed for students, typically located near universities and combining study areas with shared amenities. 
• Co-living: rental housing that combines private space with shared areas such as kitchens, lounges and community spaces, aimed at students and young professionals. 
• Serviced apartments: furnished apartments with services such as reception, housekeeping, maintenance and security, serving short-term or long-term stays. 
• Multifamily housing (rental apartments): buildings or developments containing multiple apartments under single ownership and let out to generate regular rental income. 
• Single-family rental: individual homes acquired to be let, mainly serving the long-term residential needs of individuals or families. 
• Land lease communities: a model in which residents own their homes but lease the land beneath them from the developer or operator, usually with shared infrastructure and amenities. 
• Retirement communities: residential communities planned for older people, integrating living amenities, leisure facilities and support services suited to their needs. 
• Assisted living: accommodation for older people or those who need help with daily activities, with personal care and health services provided on site. 

2. Demand for the living sector in Viet nam

In Viet Nam, the professionally managed rental housing market is still at a relatively early stage of development compared with some mature markets in the region. Even so, a number of related segments already show clear rental demand, particularly in HCMC and Ha Noi, where economic activity, foreign direct investment (FDI) and a mobile workforce are concentrated.

2.1 Serviced apartment demand in HCMC and Ha Noi

According to the Savills Q3 2026 report, the serviced apartment segment in HCMC maintained more than 7,000 units across 146 projects, with an occupancy rate of 85% and average rents rising to nearly VND 600,000 per sq m per month. New supply from three Grade C projects and the reopening of JW Marriott Hotel & Suites Saigon following renovation was largely offset by adjustments to supply at existing projects. With vacancy remaining low, a number of Grade A and B projects have raised rents after almost a year of holding them flat or gradually reducing incentives.

Demand from long-stay tenants remains the main driver, alongside MICE and short-stay guests. Newly registered FDI in HCMC (before the administrative merger) rose 1,202% year-on-year to US$9 billion in the first nine months of 2026, supporting demand from foreign professionals and staff working on FDI projects.

In Ha Noi, the serviced apartment market reached 6,700 units across 68 projects in Q3 2026, with market-wide occupancy holding above 80%. Ha Noi continues to attract strong foreign capital: FDI reached US$4.07 billion in the first nine months of 2026, up 5.9% year-on-year. This capital is driving long-stay demand from foreign professionals and managerial staff at FDI enterprises and international organisations. Investment in industrial parks and high-tech zones is also expected to continue supporting this demand.

These developments show that demand for professionally managed and operated housing already exists in certain segments. However, the market is still largely made up of individual assets, and models developed and operated as long-term investment assets remain relatively new.

2.2 Affordability and demand for long-term rental housing

Housing affordability is also becoming a consideration across the wider residential market. In HCMC, persistently high mortgage rates continue to erode affordability. In Q3 2026, the market-wide apartment absorption rate reached only 25%, equivalent to around 1,400 transactions, reflecting cautious buyer sentiment. When home ownership is out of reach for part of the population, renting becomes a more practical and longer-term choice.

This could create favourable conditions for professionally managed rental housing to develop over the long term, particularly if urban populations, workforce mobility and the need for flexible living arrangements continue to grow. For investors, this is a signal worth monitoring, as stable rental demand is the foundation of residential income properties.

2.3 A fragmented market: challenges and opportunities

The defining characteristic of Viet Nam's rental market today is fragmentation. Most supply comes from individual assets, operating quality is uneven, and there are few large portfolios under a single manager. This is both a challenge and an opening for models that combine long-term capital with professional operating capability.

Commenting on income-producing residential assets, Neil MacGregor, Managing Director of Savills Vietnam, said:

3. Market entry strategies for the living sector in Viet nam

According to Savills' investment report on the living sector, the Asia Pacific market does not operate under a single model. Investment opportunities differ significantly between countries, asset types and, above all, the way investors enter the market. Alongside the question of “which asset type to invest in?”, investors therefore need to consider “how to enter the market?”, because operating capability, demand characteristics, the regulatory framework, development costs and long-term cash flow potential all influence the performance of each strategy.

Of the strategies identified in the report, three approaches stand out: repositioning existing assets through a change of use, investing in operating platforms through M&A or growth equity, and new development to hold over the long term. The sections below examine each approach and how it might apply in Viet Nam.

3.1 Repositioning existing assets

One approach identified across Asia Pacific is converting assets that no longer suit their original purpose into living sector models. Hotels, offices and other property types can be considered for conversion into co-living, student housing or other long-stay formats, depending on location, building structure and the ability to meet regulatory requirements.

For Ha Noi and HCMC, this approach offers the potential to reuse assets whose performance is not yet optimised, rather than always starting from a new development. However, the outcome depends heavily on refurbishment costs, the feasibility of changing use and the operating model once the conversion is complete.

3.2 Investing in operating platforms

Experience in Asia Pacific also shows capital moving towards operating platforms rather than focusing solely on individual assets. An operator able to manage a portfolio, apply technology, control costs and maintain the tenant experience can create value at a greater scale than managing each asset independently.

This could be an approach worth considering in Viet Nam, where the rental market remains fragmented. Combining long-term capital with local operating capability could help build portfolios of greater scale and consistency.

3.3 Developing to hold and operate over the long term

Another approach is the build-to-rent (BTR) model, in which an asset is designed and developed from the outset for rental and long-term ownership.

Unlike the build-to-sell model, BTR looks at the whole life cycle of the asset, from location, product design, amenities and apartment mix to rental occupancy, operating costs and the ability to sustain cash flow. In Viet Nam, this model could be considered in areas with stable rental demand, particularly as cities continue to expand along transport corridors and around new economic centres.

Conclusion

The living sector is broadening the way housing is viewed: from a product built to sell to an asset that is owned, operated and capable of generating stable income over the long term, without necessarily replacing the traditional housing model. In Viet Nam, signals from the serviced apartment market show that demand for professionally managed products already exists, while affordability constraints continue to create the need for a wider choice of accommodation. The opportunity in residential income properties therefore lies not only in adding supply, but also in choosing the right asset type, entry strategy and operating model for each market.

Frequently asked questions

How does the living sector differ from residential property for sale?

Residential property for sale recovers capital on handover to buyers, whereas the living sector focuses on holding and operating assets to generate long-term rental cash flow. Management quality and rental occupancy are therefore the key drivers of performance.

Which model has the clearest demand in Viet Nam?

Serviced apartments show the clearest signals, with occupancy of 85% in HCMC and above 80% in Ha Noi in Q3 2026, according to Savills Research.

Which entry strategy should investors start with?

It depends on the size of capital, operating capability and risk appetite. Investors prioritising early cash flow may consider acquiring stabilised assets, while long-term investors may look at BTR or operating platforms.

Contact the Savills team to discuss residential income property investment opportunities in Viet Nam.  Investment Services - Savills Vietnam FIND OUT MORE CONTACT US