Colliers International Vietnam HCMC Market Insights Q22015 - Serviced Apartment (ENG)

1. SUPPLY
As of Q2 2015, there were more than 3,000 serviced apartments in the
market from 79 projects in Grade A and Grade B. District 1 remained the
favourable central location with primarily 40% of market share, equivalent to
approximately 1,700 units.
Thanks to the city expansion to the East in the last two years, District 2 has
become a new rising location for the Serviced Apartments segment in HCMC
with many high-end projects offering spacious rooms, high-quality amenities,
lower rents targeting on tenants with family that drew a competition among
projects in the CBD.
PERFORMANCE
In Q2 2015, up to 75% of Grade A and Grade B tenancies were long-term
covenants. The Serviced Apartments segment maintained a stable
performance with occupancy stayed at 84% in the review quarter. The CBD
continued to lead the market with highest occupancy rate, followed by District
2 and 7 thanks to the increasing stock of large projects over the last three
years. The average rental rate was US$23/sqm/mth, stable q-o-q but down
-2% y-o-y.
DEMAND
The Serviced Apartments segment have become more competitive to the
Hotel segment due to its cost-effective alternative choice of long-term stay
and similar offered facilities and amenities. Although having less facilities
and services compared to Grade A projects, Grade B and C projects are most
competitive due to more benefits for long-term tenancies such as discount (at
10%) on asking rent or services free of charge.
OUTLOOK
The advantages of good economic growth and ideal FDI investments to
the city lead to the dramatic increase in international business and foreign
staff, particularly from the Asian countries such as South Korea, Japan, and
Singapore, etc., residing in HCMC. Higher demand in the Serviced Apartments
segment is expected to increase in the next two years with more institutional
grade stock developed by international operator, such as the Ascott Waterfront
Saigon. This is the most prominent future Serviced Apartments project will
come online in early 2016 supplying 222 units to the market.
SERVICED APARTMENT SECTOR
Q2 2015 | MARKET INSIGHTS
HO CHI MINH CITY
Figure 1: Performance as of Q2 2015
ECONOMY OVERVIEW
Vietnam has experienced a positive sign of the economic recovery in
1H 2015 when GDP grew 6.28% y-o-y, which is the highest level in the
last 10 years. The consumer confidence index also witnessed significant
improvement when reaching 143.1 points, up 10 ppts y-o-y compared to
the average target of last year.
Total disbursement rate in the foreign funded projects grew by 9.6%
y-o-y to US$6.3 billion. In which, real estate sector continued to attract
lucrative foreign direct investments with 13% of total new FDI, placed at
second after manufacturing.
In parallel with the new legal amendment of the Vietnam Housing Law
came into effect in July 1st 2015 allowing foreigners to legally own, sell and
transfer their properties will boost confidence in property investments.
Grade A Grade B Total
Total Supply (Project) 12 17 29
Total Supply (Unit) 1,325 1,711 3,036
Average Rent Rate
($US/sqm/month)
31 25
Q-o-q Change (%) 0.5 0.2
Occupancy (%) 94 80
Q-o-q Change (%) 0.3
Project District Grade
Total
units
Expected
completion
Cosmo Residence 3 B 30 2015
New Pearl 3 B 120 2015
Saigon Centre Phase 2 1 A 216 2016
Saigon Ascott Waterfront 1 A 222 2016
Icon 3 B 63 2016
Table 1: Market Snapshot
Table 2: Significant future projects under construction
DAVID JACKSON
General Director
david.jackson@colliers.com
PLEASE CONTACT US FOR ANY INFORMATION
TRAN NGUYEN
Business Development Manager
tran.nguyen@colliers.com
www.colliers.com/vietnam
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©2015 Colliers International Research
70
75
80
85
90
95
100
0
5
10
15
20
25
30
35
Grade A Grade B Grade C
%
US$/sqm/mth
Source: Colliers International Research
Average rent rate excl. VAT Occupancy (%)