|Service apartment show stable development in the real estate market.
This real estate segment targets foreign tenants living and working in Vietnam, including long-term employees and a few short-term tourists. Tenants of high-end serviced apartments often work in foreign-invested companies, embassies, industrial parks, international banks, and technology companies.
According to Savills Vietnam, as of the end of 2019, Ho Chi Minh City has had around 6,000 apartment units with an average net rental of US$25 per square metre per month and an occupancy rate at 84%.
Le Thi Quynh Le, associate director for residential sales of Savills Ho Chi Minh City, said that backed by strong foreign direct investment flows, the serviced apartment sector continues to perform well. This resilience will be tested in the face of increased completions of hotels and a wave of new apartment complexes.
In Ho Chi Minh City, latest grade A and B serviced apartment projects can be attributed to Mai House, D1Mension Residences, and Republic Plaza, which in total offer more than 300 new units to the market.
Other big brand names in this segment are Ascott, Frasers Hospitality, and Pan Pacific. CapitaLand’s wholly-owned lodging business unit, The Ascott Limited Ascott, has been operating in Vietnam for 25 years.
Starting with its first project Somerset West Lake Hanoi, so far Ascott’s portfolio comprises of over 7,000 lodging units in 28 properties across nine cities and provinces, such as in Hanoi, Haiphong, and Ho Chi Minh City.
According to Lew Yen Ping, regional general manager for Ascott in Vietnam, Cambodia and Myanmar, the company continues to expand its presence in Vietnam with the openings of PentStudio West Lake Hanoi and Somerset D1Mension Ho Chi Minh City in 2019, as well as Citadines Pearl Hoi An and Citadines Marina Halong City in 2020.
“In addition, Ascott also will open a new brand with the Ascott Serviced Residences in 2021. Meanwhile, our first 5-star Vertu hotel in Cam Ranh under the portfolio of TAUZIA Hotels, which is slated to open in 2022, is Ascott’s first move into the lodging segment beyond its core business of serviced residences,” Lew said.
Elsewhere, Frasers Hospitality, a member of Frasers Property Group, has now a total of more than 670 units with two operating projects of Fraser Suites Hanoi and Capri by Frasers in Ho Chi Minh City. This company is opening its third project named Fraser Residence Hanoi this year.
Many other junior brands include names like Happy Homes, InterContinental Residences Saigon, Homestead Parkview, Merin City Suites, and Vinhomes Central Park Apartments.
The average rent for serviced apartment units now is ranging around US$35 and US$28 per square metre for grade A and B apartments respectively. By 2022, 1,500 new units will enter in response to the growing demand for long-term stays, which is mostly generated by increasingly favourable visa policies and an influx of foreign investment.
In Hanoi, by the end of 2019, there were approximately 4,600 apartment units with an occupancy rate of 82%. An estimated 2,700 units from 22 projects will enter the Hanoian market this year, including three projects in the west of the city.
Different from Ho Chi Minh City, Hanoi’s serviced apartments are facing stiff competition by buy-to-let apartments. Those are located in Tay Ho, Long Bien, Ciputra, and the west of the city.
The Republic of Korea's community, leading the group of serviced apartment tenants, has changed its demand from renting serviced apartments at projects to apartments that are bought by the individual investors to rent. Many of them even decided to buy apartments or houses in Vietnam.