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Making hay while the sun shines
Vietnam's first gold-standard serviced residence, Fraser Suites Hanoi, is set to officially open by the final quarter of this year. Fraser Suites Hanoi general manager Colin Tan tells about his expectations for meeting the growing residence demand in Vietnam.
Do you expect the opening will help the serviced residence demand and supply in Hanoi?
The demand for residential space in Vietnam will continue to rise, especially in the big cities like Hanoi and Ho Chi Minh City as the number of expatriates coming to Vietnam, primarily to these cities, will keep growing in light of the country’s strong economic growth.
With the increase in foreign investment into Vietnam bringing along the relocation of well-travelled senior executives, the demand for internationally-managed quality serviced residences is also on the rise. Touching on supply and demand of serviced residences in Hanoi, there are currently more private-owned semi-furnished or leased-back apartments versus internationally-managed serviced residences.
In addition to that and particularly in Hanoi, most serviced residences have been opened for quite a while now, some for over 10 years. The expectations such as the fit-outs, interior designs and services of today are not what it was 10 years ago. We’re expecting in the next five to seven years, with some serviced residences to be completed and together with the existing serviced residences including that of Fraser Suites Hanoi’s, hopefully by then the demand will meet the supply.
To what extent do delayed construction and property projects affect the balance of serviced residence demand and supply in Vietnam?
Certainly the inflation of construction materials has affected the construction of many property development projects. However, it is not only just inflation itself that has delayed several construction projects, but also the lack of available skilled construction workers in Vietnam. However, I don’t think it will delay the development of the balance between the demand and supply of serviced residences as most projects are long-term developments so the investors will need to mobilise the fund for the completion of their projects.
Similarly, what impacts will the Vietnamese government’s move to allow foreign property ownership have on this balance?
Overall, the government’s new policy will enable many foreigners to own or purchase properties in Vietnam which will then hopefully propel the growth in demand in overall the condominiums or apartment projects. However, this will have very little impact on Fraser Suites Hanoi as we are not in the purchase or leased-back market like the condominiums or local apartments.
Our services are more extensive or equivalent to that of an international five-star hotel. Concierge services, enhanced security which includes crisis management and customised maid services are available. Moreover, many senior executives will still prefer to stay in a serviced residence such as Fraser Suites for the convenience and the large living space we can offer. I think that differentiates serviced residences from hotels and apartments.
Office rentals in Vietnam are ranked among the top five most expensive areas in the region. How do Vietnam’s service residence rentals compare regionally?
Apartment rentals in Vietnam are still affordable as compared to places like Singapore, Japan, Korea and Hong Kong. Vietnam is still considered young in serviced residences supply and many cannot be compared. We should be comparing dollars to square metres and the overall facilities and services provided or inclusive versus dollars to a unit of apartment.
We see it as a continuous education process to those who are involved in accommodation sourcing so that we can be differentiated fairly. With the shortage of five-star hotels in Vietnam and in particularly, Hanoi, plus the fact that many foreigners whether for leisure or business, who did not have the option before, are slowly turning to internationally-managed serviced residences for their accommodation needs. The daily rental of One-Bedroom Deluxe (55sqm) in Fraser Suites Hanoi is equivalent to the daily rate of a standard hotel room in a five-star hotel. The facilities are similar if not more. Thus, the choice is simple.
Jones Lang LaSalle’s recent survey ranked Vietnam among the nations having the lowest scores in property transparency index. What is your assessment?
As I know, Vietnam’s property transparency index has improved this year and this is a good sign for investors. Vietnam’s property market was overheated with prices rising too high and too fast from last year. People queued up to buy high-end apartments with unreasonable prices, like in Ho Chi Minh City due to speculation.
But recently, I think the land prices are becoming more reasonable but still expensive compared to other countries, as the land owners are more realistic in pricing and the government has set in place more policies to prevent speculation and stabilise the market. This will offer opportunities for investors who have good knowledge about the real estate market.
VNN
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