“The real estate market in Ho Chi Minh City has seen a lot of changes, with the segment of serviced apartments market showing high and stable returns in the process of changing to adapt to the conditions of new real estate market” – This is the opinion of Mr.Marc Townsend, CEO of CBRE Vietnam at the introduction of new trends in the market of serviced apartments in Ho Chi Minh City on July 17.
Serviced apartments project increasingly in Ho Chi Minh city
A number of existing projects in the CBD are likely to increase by 10% -20% after completion of the upgrade this year, including Somerset Ho Chi Minh, Sherwood Residence, Diamond Plaza and Riverside.
According to Mr.Marc Townsend, the market continues to receive boutique apartment and hybrid development services throughout Ho Chi Minh City and the latest event about serviced apartment in District 2 in the DB Court building.
It is noteworthy that the DB Court building was previously a rental office project, which was converted to serviced apartment by the owner during the construction process after finding the current difficulties of the office market.
On a smaller scale than other branded serviced apartments, DB Court is considered a “boutique” project with only 38 apartments. Here, the serviced apartments are invested quite carefully from the design, furniture and facilities suitable for tenants from Europe and Asia, especially the tenants are very specialized single customers.
According to CBRE research, the DB Court Serviced Apartment project is one of the typical projects for the new segment in the serviced apartments market in Ho Chi Minh City.
Fierce competition from apartments for rent
From the first quarter of 2016 up to now, there have been 18 serviced apartment projects in Ho Chi Minh city that have been converted or made into hybrid products. Specifically, the converted projects such as Saigon City Residence, District 1 with 16 serviced apartments; Hybrid projects (apartments for sale but converted into serviced apartments), XI Riverview Palace (serviced apartment in District 2), Ben Thanh Luxury Apartment (District 1), Saigon Pavillon (District 3), etc.
Thus, the supply of high-end products is still very limited. Meanwhile, demand is on the rise with the expansion of the business community in the city, such as the Korean and Japanese communities.
Although the luxury apartment market is lacking, the serviced apartments segment is also struggling with fierce competition from apartments for rent. The reason is that although the price of serviced apartments is softer than that of the hotels, new high-end apartments have entered the market with affordable rents, which has pushed prices down sharply.
In addition, this divergence also recorded from the first quarter of 2011, the new supply consists only of small-scale projects less than 70 apartments, even up to 15/18 new projects have less than 50 apartments. Mr.Marc Townsend said: “Most of the boutique serviced apartments projects are invested and managed by local companies.
A new hope for serviced apartments market
Assessing the current serviced apartments market, CBRE experts say that this is a time for tenants. Reduced FDI has affected the serviced apartments market.
Specifically, rental fee for Grade A serviced apartments have fallen for three consecutive quarters by more than 10% (below $ 35/sqm/month), Grade B prices hit a low of $ 25/sqm/month since the crisis financial break out.
In addition, the tendency to rent has changed but when the selection of less bedroom apartments, smaller size (1-2 bedrooms) are the most selective; Budget rents from $1,200-2,500 per month are increasingly rapidly at 63% in the second quarter of 20172.
Regarding the prospect of serviced apartment market, CBRE Vietnam said that there are nearly 4,000 serviced apartments in Ho Chi Minh City and this is a modest supply source with the increasing demand. (just one quarter compared to Bangkok).
On the other hand, serviced apartments in District 2 are showing a better recovery potential after the crisis, the rate of rental of serviced apartments is 1.5 times faster than the office. New supply is expected in Ho Chi Minh City.
By the end of 2017, the market will receive more than 3,800 apartments, but only 33% of serviced apartments in District 2, equivalent to 1,286 are still being built on paper.
The trend of serviced apartments in Ho Chi Minh City is one of the major trend of the real estate market. According to the leading experts in the field of real estate, the service apartment promises to be a potential trend and have a great influence on the real estate Ho Chi Minh City in particular and the country in general. Although it has a lot of potential and strengths, the investors need to be cautious in getting information as well as legal procedures before investing in serviced apartments to get the desired effect.
Thang Tran – Mogi.vn
