Serviced apartment market looks bright
Investors should pay heed to the potential for serviced apartments in Vietnam because demand for this segment was forecast to increase and current supply was limited, Marc Townsend, managing director of CBRE, said at a conference on Thursday.
Co-organised by Thailand-based Irving Seminar&Training Co and its local partner Lean Media, the conference attracted the attendance of many property investors, developers, operators and consultants.
Townsend said more and more expatriates were frequently travelling or coming to live and work in Vietnam and this would drive demand in the serviced apartment market.
According to Trends in Managing Mobility survey 2010 by ECA International, Vietnam will be the 11th most common destination of companies sending staff on international assignments up to 2013. This is likely to ensure that the demand for accommodation from companies sending staff into Vietnam is likely to remain strong in the next three years.
However, the supply is too small and has not yet met the demand. The South Korean community alone has 70,000 families, indicating that demand from expats is high.
HCM City has 3,595 units, mainly in District 1 (47.3 per cent), District 7 (13.5 per cent), District 3 (12.4 per cent), District 2 (10.5 per cent) and Binh Thanh District (9.2 per cent).
Hanoi has 2,367 units, focused in the districts of Tay Ho (31 per cent), Ba Dinh (25 per cent) and Cau Giay (20 per cent).
Da Nang has 146 units from four projects.
The serviced apartment market will see new projects come into the market by the end of this year.
HCM City has four new projects - Hotel Nikko Sai Gon (53 units), Sai Gon Mansion (20 units), the Vista (100 units) and An Phu superior Villa Compound (68 units) - that are set to open soon.
In Hanoi, the Keangnam Landmark 72 (378 units) is also expected to be on the market soon.
Jean Francois Chevance, director of Design Archetype Group, said serviced apartments were generally business-oriented with smaller units, fewer bedrooms (1-2 bedrooms) preferred.
Andrew Langdon, senior vice president of Jones Lang LaSalle Hotels, advised Vietnamese property owners to seek international companies to manage their serviced apartments.
This would bring benefits including a global profile, brand awareness, professional marketing, and structured and standardised operating procedures, he said.
Property owners and hotel operators should maintain equity in relationship and balance the sharing either of success or of challenges that require greater efforts, Langdon added.
Marc Townsend said the next wave of development within the hospitality sector would be in terms of an increased supply of serviced apartments. Hence, industry players including international ones were ready with expansion plans to explore its potential and opportunities.
Despite ample opportunities, there were several challenges that inhibited growth of this segment in Vietnam. The biggest challenge lied in land prices and land sources, he said.
Many projects were also being suspended because of a capital shortage, he added.
Vietnam Investment Review - December 6, 2011