Supplies on the serviced apartment market in HCMC will rise sharply in the coming time as developers have decided to convert their high-rise office buildings into serviced apartment ones to cope with dipping office demand.
DB Court in HCMC’s District 3 was originally designed as an office building. However, its investor has changed it into a serviced apartment building, said Marc Townsend, managing director of CB Richard Ellis (CBRE) Vietnam.
With 38 serviced apartments of 50-85 square meters, the nine-floor building managed by Dragon Fly will enter the market this month. The ask price is VND35 million per month, or US$1,700, for a one-bedroom unit and VND52 million, or US$2,500, for a two-bedroom one.
Saigon City Residence, a two-star hotel in District 1, has also been changed into a serviced apartment building with 16 units.
The serviced apartment segment has over the past five years proven that it has a faster rate of return than offices, according to Townsend. There has been no significant decrease in rents for serviced apartments while office rents have shrunk for the 11th straight quarter.
Small-scale serviced apartments managed by local businesses have become trendy. Fifteen of the 18 serviced apartment building projects that have entered the market over the past two years have less than 50 units each.
Given poor sales, condominiums have been turned into serviced apartments to cope with the tough market conditions. They include Xi Riverview Palace in District 2, Ben Thanh Luxury Apartment in District 1 and Saigon Pavillon in District 3.
The growing new trend has led to a fierce competition among serviced apartment projects, especially buy-to-let apartments such as the Vista, Saigon Pearl and the Manor. Some serviced apartment buildings even accept daily rentals, thus directly competing with hotels.
HCMC now has around 3,940 serviced apartments, according to a market survey by CBRE. The figure is expected to double within the next three years if the on-going projects are complete as scheduled.
The Saigon Times Daily