Go west
21-11-2013
Land in Cau Giay and Tu Liem districts is increasingly being sought for new high-end serviced apartment buildings to meet the rising demand of foreign renters. According to property consultants, the area, also known as My Dinh, is becoming the new CBD of Hanoi, attracting corporate clients to this very dynamic, up and coming area that offers improved infrastructure over the more traditional inner-city zones.
Christopher Piro, associate director of Vietnam Sotheby’s International Realty, told Timeout that the office market in Western Hanoi has been growing significantly, with over 100,000m2 of space coming onto the market over the past year alone.
“As the office market shifts to the west end and most blue chip or multinational companies relocate to western Hanoi, so will most foreign rental tenants as their most critical consideration is the proximity of their home to their workplace,” Piro said.
Furthermore, he believes western Hanoi has become increasingly attractive thanks to its rapid urban development and infrastructure: “Surrounding facilities and the ease of transportation to other major destinations, including the airport, hypermarkets and other provinces have been influential factors for this move.”
The area is particularly popular with Korean and Japanese, who are living in new, modern condominiums such as Indochina Plaza Hanoi, Richland Southern, The Manor and Dolphin Plaza. Surrounding these properties are international education facilities such as Korean and Japanese schools and KinderWorld. Restaurants and marts catering to Japanese and Koreans are growing in number
as well.
According to Piro, foreign investors in Hanoi are evaluating new production lines, building higher end constructions and producing consumer goods which reflect the positive growth and income of Vietnamese society. “Therefore, the demand for full serviced apartments will continue with the right price-value ratio for consumers,” he said.
The area is now home to some outstanding serviced apartment projects, such as Crowne Plaza West Hanoi Residences, Keangnam Hanoi Landmark Tower, and some other smaller developments.
According to a source from Crowne Plaza West Hanoi Residences, serviced apartments in this development have been full in recent months.
“Now we even have to compare among different orders in order to give priority to long term and bigger contracts,” they claimed, adding that three bedroom apartments are the most hunted because many businesspeople working in this area bring family with them.
They also report that other serviced apartment developments in the west have a high occupancy rate of up to 80 per cent, with the majority of tenants coming from Japan, Taiwan and South Korea. Rental rates for one-bedroom serviced apartments in Keangnam start from $2,000 per month and run up to $2,650 per month for two-bedroom units.
According to Do Thu Hang, head of Savills’ Hanoi research department, to the third quarter of 2013, serviced apartment demand in the west area of Hanoi made up more than 23 per cent of the total supply of the whole city. This demand represents a 43 per cent year-on-year rise.
“This is a very positive sign, showing that the demand for serviced apartments in the west is developing,” Hang said.
“We expect that with the increase of investment from Asian countries, they will still dominate the market in the coming time,” Hang added.
Another preferred choice for expats is leasing a unit from the increasing number of quality condominium projects in the area, which are charging much lower rental rates than serviced apartment buildings. For instance, rental rates at Indochina Plaza Hanoi (IPH) start at $1,500 for two-bedroom units. Nearby, hombuyers at Richland Southern are leasing two-bedroom units for around $900 per month.
With stable supply and demand increasing, some developers are wooing their buyers by encouraging them to rent their apartments.
In the IPH, the key tenants are Japanese who represent more than 60 per cent of total occupiers and who expect a high level of quality.
“With IPH having recorded exceptional performance in terms of sales and rental return generation with major leasing occupancy by Japanese residents who are very keen on the serviced apartment model, we have decided on a fresh approach to the sales strategy in which we sell the serviced apartments and then put them up for lease. By doing this, we proactively secure above-market rental returns for residence buyers as we have a great network of wealthy renters who are willing to move in right away,” said Piro.
For starters, IPH’s developer decided to convert about five units into serviced apartments by furnishing these units and offering additional services.
“The program will be officially launched later in the year; however, we are always trying to think ahead of the curve and accommodate the demands of the market before our competitors. If we feel the first round of serviced apartments works out positively, we will continue to offer more of these residences to the market,” Piro said.
Dolphin Plaza, a development under domestic investor, TID, is another prime example of leasing. With more than 385 high-end apartments, Dolphin is considered an ideal destination for those from Asian countries, such as Japan, South Korea and Thailand, with people from these nations comprising more than 80 per cent of occupiers. Managed by PMC, apartments here are leased from $1,300 to 2,000 per unit per month.
Meanwhile CBRE, another consultant, also commented that the strengthening of the western submarket of serviced apartments is shown most significantly with units in the range of $1,000 to $2,000, thanks mainly due to the emergence of the office hub along Pham Hung corridor, the strengthening of the Japanese and Korean communities in this area, and competitive rents.
Moreover, the upcoming Samsung factory in Thai Nguyen is also expected to generate increased demand for serviced apartments in Hanoi and on the edge of the city.
