House-for-lease demand to grow as more expats return
By Dinh Dung - The Saigon Times Daily
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| Diamond Plaza building is one of 12 key players in the central business districts offering serviced apartments in HCMC - Photo: Dinh Dung |
HCMC - The increasing number of expatriates coming to HCMC for working is sending a positive signal to the serviced apartment market as those potential tenants are believed to create demand for residential leasing market in the coming time, said a market researcher.
CB Richard Ellis Vietnam (CBRE) cited figures from the HCMC Department of Labor, Invalids and Social Affairs to say that the number of work permits issued to foreigners in the city during the first half of this year reached some 3,500 persons, nearly equal to the total amount issued in 2009.
“That indicates companies are again willing to expand head accounts, both Vietnamese and expatriates, and this has in turn generated demand for residential leasing market,” Marc Townsend, managing director of CBRE, said in a market overview presentation held here in HCMC on Tuesday.
Townsend presented the company’s research saying that in the new wave of expats coming back to the city, Asian expatriates took the majority, not the western ones as seen before. Most foreign experts come from India, the Philippines, Malaysia, Singapore, Japan and they work in sectors of finance, banking, information technology and school.
Besides the main source of professional expatriates, the serviced apartment market has seen demand deriving from overseas Vietnamese and a new and growing trend from local wealthy Vietnamese.
According to CBRE, the HCMC serviced apartment stock is around 3,250 units, in which there are some 980 Grade A, 1,500 Grade B and 770 Grade C units.
Most of key players, which are located in the central business districts, are running with average occupancy of 80%. The average asking rent is at around US$31 per square meter for Grade A, US$25.5 per square meter for Grade B and US$18.6 per square meter for Grade C apartments.
The research company said 11 ongoing construction projects will provide some 495 serviced apartments late this year, and there are some 900 additional units to join the market next year.
The market has begun to see new stylish boutique players, including Lafayette De Saigon, LTT Court and IWA Square in District 1 and Glenwood in District 2. Besides, some other projects begin to appear in decentralized areas, such as the Crescent Residence in the new urban town Phu My Hung and Green Hills in Quang Trung Software Park.
Townsend noted that although returning expatriates was a positive indicator for the residential leasing market, the majority had returned with smaller housing budgets than those which were seen in the years of 2006 – 2008. The market has seen expat budget falling by up to 20% this year.
“These tighter housing budgets have pushed many tenants to decentralized locations such as District 2 and District 7, where cheaper accommodation, including buy-to-let units, can be found,” he commented.
The director said some 1,400 buy-to-let units in projects such as Avalon, Saigon Pearl, The Manor, Sailing Tower and Cantavil Hoan Cau were among alternatives, causing severe competition in the market.
Besides offering monthly rates, some landlords have become more flexible in offering weekly or daily rates to woo tenants.
Townsend, however, noted that there had been sustained demand in serviced apartments for buildings in central business districts, and given the restrained housing budgets of many of the returning expatriates, there would be a good potential for boutique serviced residences in the city.