According to the latest statistics on revenue as well as investment status of serviced apartments in Ho Chi Minh City, the reality is that many high-rise buildings have been fully or partly renovated, Numbers have even invested in new serviced apartments, although this segment has fallen for the third straight quarter, down 10.2% to 17-21%.
So, what is service apartment? Situation and development trend of serviced apartments in Ho Chi Minh City during this period. Let 168property.vn learn about this in the article below.
What is a serviced apartment?
A serviced apartment (also known as a service apartment or an extended stay apartment) is a fully furnished apartment available for short-term or long-term stay, providing hotel-like amenities such as room serviced, a fitness center, a laundry room. Most of them are equipped with full kitchens, Wi-Fi and in-apartment washers and dryers.
Companies frequently use serviced apartments to host professionals who may be on a local or international work assignment. It is common for executives to stay in serviced apartments temporarily while searching for a permanent residence or relocation. Although serviced apartments are primarily occupied by business executives, they are also available to the general public.
Real situation of serviced apartment for rent in Ho Chi Minh city
On July 17th, 2017, the DB Court building originated as an office project that opened with new functions, providing Ho Chi Minh City with 38 serviced apartments. According to the project brokerage unit, before Lunar New Year, DB Court is still an office building. However, due to this market share is oversupply, the price is constantly plummeting, so investors have decided to switch functions in the hope of improving the ability to recover capital when the real estate market back in time.
From late 2014 up to now, the trend of converting part of the capacity of buildings into serviced apartments, especially serviced apartment in District 2 for rent has gradually become popular. Some high end condominiums are slow to sell because the real estate market is partially transformed into serviced apartments.
Not only the supply of transformed projects, the list of new projects jumped into the market share of serviced apartments also increased sharply. In the first half of this year, the projects invested in this segment included Saigon Center Phase 2 (District 1), Cong Hoa Garden (Tan Binh District) and SC Vivo City (District 7). The One Complex project in Ho Chi Minh City was battered by the Bitexco Group in the second quarter, also devoted to the market share of serviced apartments, and some projects of serviced apartment in Thao Dien are remarkable too.
Even an old unit specializing in apartment business under 1 billion is Tan Binh Construction Investment Joint Stock Company is also planning to invest in serviced apartment project serviced apartment in Ho Chi Minh city, near Tan Son Nhat Airportf, heading to the group of guests from Japan and Korea.
New future for serviced apartment for rent in Ho Chi Minh city
Research Department of Savills Vietnam forecast that in the next 5 years, HCM City could receive 21 more future projects providing more than 3,800 rental apartments to participate in the market. In the last two quarters of 2016, it is expected that there will be 5 projects of all grades with 360 serviced apartment in District 2 for rent going into operation. This may have a negative impact on the performance of the market.
Although the shift to invest in apartments for rent in Ho Chi Minh City is ongoing, but this market does not appear positive signal. In the second quarter, Grade A rents declined by nearly 1% quarter-on-quarter and 10.2% from the same period last year. Similarly, Grade B dropped 2.7% from first quarter of 2017 and dropped 9.9% from the third quarter of 2017.
Meanwhile, the current average asking rent for Grade A apartments is 609,000-735,000 VND per month (29-35 USD). Grade B apartments are offered between VND 400,000 and VND 525,000 per month (19-25 USD). The offer price has fallen continuously for three consecutive quarters.
General Manager of CB Richard Ellis (Vietnam) Co., Ltd., Mr.Marc Townsend analyzed, in the crisis period, service apartment in HCM City today has two new supply trends. The first is the hybrid project because the apartment sales are slow to move and the second is the project of conversion from hotels, offices to serviced apartment in Ho Chi Minh city.
The reason for this shift in investment, according to Mr.Marc, is that serviced apartments are likely to recover better after the crisis. Moreover, the rate of return of this segment is faster than the office. Serviced apartment rates have fallen but have not experienced a severe downturn and the pace of rental is half and a half times faster than office space.
Domestic real estate experts also commented that the serviced apartment is a support solution, replacing the appearance Officetel is appearing massively in Ho Chi Minh City. On the other hand they also act as a real estate trend in 2018 due to the need to compete in the market and the number of potential customers.
According to this article, we want to provide you some information about this special real estate segment, so if you want to invest in the future, you might have a full look at the market to make the right decision.