Since 2008, the number of foreigners working in Vietnam has increased steadily by 8 percent per annum. With that, the market of serviced apartments for lease in large cities has attracted many investors.
Savills’ Q2 report showed that the occupancy rate of serviced apartments was 88 percent in Hanoi and 80 percent in HCMC.
In the first half of 2018, industrial zones attracted $7 billion worth of foreign direct investment (FDI), accounting for 34 percent of total FDI capital.
The occupancy rate of serviced apartment remains unchanged at 80 percent last year and has not reached 90 percent, as seen many years ago.
The international serviced apartment brands that first joined the Vietnamese market include Somerset West Lake, Fraser Suites, Pan Pacific and some Japanese brands.
However, after 20 years of presence in Vietnam, the operational scale of the brands remains small compared with their global network.
The leasing fee of serviced apartments in Vietnam is between VND7.9 million and VND45 million a month.
According to CityHouse Apartment, which specializes in providing serviced apartments for $330-2,000 monthly in HCMC, the number of $1,200-2,000 apartments available is modest. These apartments are in high demand, but the supply is short.
As for the $800-1,200 apartments, the service quality and investment scale have not seen considerable improvements.
Meanwhile, apartments for $400-800 have been developing: there are many projects in this segment, but they have small scale, and associated services are minimal.
However, a real estate expert said that though the expected profits have decreased compared with some years ago, the 80 percent occupancy rate is still attractive enough to attract serviced apartment management brands.
Do Thu Hang from Savills said that the rental fee of serviced apartments is less competitive than the apartments investors buy for lease. In general, serviced apartments only have 1-2 bedrooms, while ordinary apartments have 2-3 bedrooms.
Serviced apartments target expats, travelers and businesspeople who stay in Vietnam for a long time; the apartments have large space and sufficient services. Unlike apartments built for sale or villas for lease, serviced apartments provide interior items, 24/24 services and are managed by professional units.
A report found that by the end of 2017, the total number of industrial zones in Vietnam had reached 220, covering a total area of 69,000 hectares. In Hanoi and neighboring provinces alone, there are over 70 industrial zones.
However, the number of serviced apartments remains modest with just several international management brands. The development of the Hanoi market has not corresponded to its potential.
According to a report on Vietnamnet