Married with two children, Nguyen Thi Huyen is a typical Hanoi office worker. In early December 2024, the 41-year-old resident of Vietnam’s capital did something that is becoming increasingly common among the nation’s upper middle class: she went into a showroom of Vinhomes, part of the country’s biggest conglomerate, Vingroup, and bought the family’s first apartment.
“Buying a house is a trend among our generation. Real estate prices in Vietnam are soaring, so buying a house means having an asset to sell,” she told Nikkei Asia. The Vietnamese real estate website Batdongsan.com says the average selling price of homes nationwide as of June 2024 was 24% higher than at the start of 2023, driven in large part by the capital’s apartment market.
The spending splurge in Southeast Asia’s fastest-growing economy is not confined to property. Goods that were until a few years ago considered luxuries in the country, such as cars, air conditioners, luxury smartphones, and high-end cosmetics, are becoming mainstream as rapidly rising incomes and cultural factors combine to elevate the purchasing power of the upper middle class to a level on par with neighbors it once lagged far behind.
“Until my parents’ generation, being poor was the norm, and frugality was necessary,” said Nguyen Kim Ngoc, a 38-year-old translator who lives in Hanoi. “Today, the desire to have high living standards is greater than ever. And as incomes have increased, people no longer hesitate to demonstrate their wealth. In the time of our parents and grandparents, you had to hide it if they were rich, or the authorities would crack down on you.”
In 1990, Vietnam’s per capita gross domestic product, an indicator of the country’s economic output, was USD 122, one-thirteenth that of Thailand’s, one-seventh of the Philippines’, and one-sixth of Indonesia’s. However, as the economy was liberalized and foreign investment poured in over the following decades, per capita GDP skyrocketed to exceed USD 2,000 in 2012 and USD 3,000 in 2018. As of 2024, Vietnam has overtaken the Philippines and is close to Indonesia.
Property is arguably the most sought-after “luxury.” Construction has slumped in the last few years as distressed developers and a nationwide corruption crackdown have blighted the sector. Data from real estate company Savills shows that only 33,500 condos were built in Hanoi and Ho Chi Minh City in the first half of 2024, lower than in 2014. Sales, in contrast, remain strong. Vinhomes says their contracted sales totaled about VND 51.7 trillion (USD 2 billion) in the same period, up 27.3% from a year earlier.
Car ownership is another major indicator of the strength of the Vietnamese consumer. According to data from the trade ministry, there were 63 cars per 1,000 at the end of last year, triple the proportion of 13 years earlier. It is still below Indonesia, but the annual growth rate of 17% from 2015 to 2020 was the fastest in the world, according to the International Organization of Motor Vehicle Manufacturers. Automotive sales totaled 90,701 units in the July-September 2024 quarter, according to the Vietnam Automobile Manufacturers’ Association, up 25% from a year earlier and marking the highest growth rate in the region. Local media have reported the government expects annual sales to hit 1 million by 2030.
Furthermore, Vietnam’s Nasdaq-listed EV maker VinFast, whose sales have yet to be included in the national statistics due to the company’s disclosure policy, announced it had sold 44,773 EVs in the first nine months of 2024.
“In a country where motorbikes are the norm and owning a car is seen as a status symbol, consumption among the upper middle class is expected to increase further,” said a Hanoi-based official with the Japan International Cooperation Agency, a government aid agency.
Tran Nguyen Vu, a 33-year-old IT engineer, bought a Japanese Subaru car in October for VND 1.13 billion (USD 43,714). He also purchased a Vinhomes apartment in the center of Hanoi two years earlier, paying VND 1.85 billion (USD 71,567) for the two-bedroom home.
“I’m not the type to scatter money around. I scarcely buy luxury brands or home appliances but spend money on things that make life happier,” he told Nikkei.
Besides apartments and cars, smartphone sales are also booming. The number of registered smartphones among Vietnam’s 100 million population is estimated at 85.73 million, up 6.9% from a year earlier—double that of 2020 and up 23-fold from 2014 — according to Statista.
In addition to Vietnam’s booming economic output and investment rates, two cultural factors partly explain the high growth rates in ownership of products once considered luxuries.
One is that multigenerational home occupancy is now common. As the Vietnamese consulate in New York explains on its website: “In Vietnam’s traditional society, a typical family has three or four generations living under the same roof. With the view of ‘more children, more fortunes,’ many families want to have lots of children and grandchildren.”
Nguyen Thu Ha, 27, who works in Japan, said three generations of her family lived in a house on the outskirts of Hanoi from 1997–2011. At its peak, there were 13 people living in the property, including uncles, aunts and other relatives. “It is still common in Vietnam,” she told Nikkei.
Her grandparents own the house, so her parents and relatives do not have to pay rent. All pay common expenses, such as electricity and water, equally.
“There were times when it felt cramped, but the benefits of being able to share the housework and help each other are great. We can also use the rent savings for education and entertainment expenses,” she said.
The other cultural factor is the high proportion of dual incomes in many homes. Vietnam’s male and female labor force participation rates were 77.8% and 68.5% in 2023, according to International Labour Organization estimates. This compares with the East Asia and Pacific averages of 73.6% and 58.6%, respectively.
“It’s my impression, but women tend to be more hardworking in Vietnam, and the number of female managers is generally increasing,” the manager of a Japanese company based in Ho Chi Minh City said. “It is an easier environment for women to work in than in Japan or other Southeast Asian countries.”
Vietnam’s declining fertility rate, particularly in the 1990s, has also become a tailwind for spending more money on luxurious items as the economy has grown. Vietnam’s fertility rate of 3.6 children per couple in 1990 fell to 1.9 in 2022, the fourth lowest among major ASEAN economies after Singapore’s 1, Thailand’s 1.3, and Malaysia’s 1.8.
Stable domestic politics, relatively cheap labor, and low land costs have all contributed to making the country a very attractive destination for foreign investment for more than a decade. Being located next to China with deep water ports in both the north and south and having good land connectivity to other countries in the Indochina Peninsula are significant advantages. The US-China rivalry has also helped Vietnam position itself as a safe alternative investment destination.
Companies from major sources of foreign direct investment, such as South Korea, Japan, Singapore, and the US, are now not just setting up production bases—they are also realizing that Vietnam is a promising consumer market.
In particular, Japanese companies are increasing their investments targeting Vietnam’s upper middle class. Department store Takashimaya plans to build a commercial and office complex in Hanoi in 2027, following the success of its department store in Ho Chi Minh City that opened in 2016.
Real estate giant Mitsubishi Estate started work on four projects in 2024, including large apartment complexes, bringing its total investment in Vietnam to USD 500 million, according to a report by NNA, a Japanese media outlet covering Southeast Asia.
Cosmetics manufacturers like Shiseido and Daiichi Sankyo Healthcare are also trying to mine the Vietnamese market, not least because of the economic slowdown in China, where they had been focusing their efforts.
Like many people, Ngoc, the translator, believes the boom is likely to continue, particularly as the “influence of Western consumer thinking about a good life” becomes more pervasive. “People have never had so much money before, they have never had so many opportunities to spend money and show off their wealth,” she said.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.