Serviced apartments see higher demand
By Dinh Dung - The Saigon Times Daily
HCMC – The demand for serviced apartments is forecast to increase substantially alongside the rising number of foreign visitors to Vietnam in the first half, while the apartment-for-lease segment is losing out in the competition, said market researchers.
CB Richard Ellis Vietnam (CBRE) says its residential leasing department recorded serviced apartment enquiries rising 30% in the second quarter, and most of the enquiries came from Japanese tenants and the increasing number of Indian expatriates in the country.
Asked rents decreased from 3% to 5% as compared with the same period of last year, in which Grade A was offered around US$30 a square meter per month, while grades B and C remained at US$25.5 and US$18.5 respectively, according to CBRE.
With new supply, including 64 Grade B units and 96 Grade C ones, coming online in the second quarter, the total supply of serviced apartments in HCMC has now risen to 3,210 units. Vacancy across all grades remained stable at around 18%.
Rents are bottoming out as the market is witnessing the gap between asked and achievable rents narrowed. However, it is expected to see strong competition between the serviced apartment segment and the apartment-for-lease market in the coming time.
Savills Vietnam supports the above view, saying that with huge demand for accommodation and prices of apartments for sale remaining high, the apartment-for-lease market is seen having good potential for investors.
The market research firm says many apartments are purchased as investments then leased out by their owners. These units do not command high rent since such apartments do not come with services and professional management.
“Serviced apartments, therefore, are now competing directly with apartments for lease as well as villas for lease,” Savills says.
The company highlights that Asians still represent the largest number of expatriates living and working in Vietnam, and drive up demand in the serviced apartment market.
Savills projects there will be some 1,300 units to join the market over the next few years. Currently, six of thirteen planned projects are under construction, providing the market with about 500 serviced apartments in the coming time.
Most future supply is located in the central business districts 1 and 3 and Phu My Hung new urban town in HCMC’s District 7.