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| According to experts, good growth in FDI capital along with many policies supporting the tourism market will bring prospects for the hotel and serviced apartment segment in Hanoi . (Source: XD Newspaper) |
Experts from Savills Vietnam commented that efforts to remove bottlenecks in entry and exit, and the new visa exemption and e-visa policy effective from August 15, 2023, along with many attractive tourism products for international visitors, a series of investment attraction policies... have created a positive shift in the real estate market. The positive signal is not only for the hotel market but also has the potential to spread to other accommodation products such as serviced apartments.
Statistics from the Foreign Investment Agency (Ministry of Planning and Investment) show that in the first three quarters of 2023, registered FDI capital in Vietnam reached 20 billion USD, up 8% year-on-year. Of which, Singapore is the largest investor with a 21% market share, followed by China with 15% and Japan with 11%. Hanoi continues to be the locality attracting the highest registered FDI capital nationwide with 2.5 billion USD, followed by Hai Phong, Ho Chi Minh City, Bac Giang and Binh Duong.
Notably, in September 2023, Vietnam and the United States announced the establishment of a Comprehensive Strategic Partnership. This creates an important attraction for large international technology corporations to invest in Vietnam, bringing additional opportunities for important FDI projects. Thanks to that, it also creates a positive outlook for the serviced apartment market - Mr. Matthew Powell, Director of Savills Hanoi commented.
Positive outlook for serviced apartment segment
According to Mr. Matthew Powell, the increasing flow of foreign direct investment will also bring a large number of international experts to come and work; creating a solid demand for the serviced apartment segment, thereby contributing to the continued growth of this segment.
Faced with this trend, many people have invested in apartments for rent in Hanoi and Ho Chi Minh City. However, the leasing of these new investors also has potential risks when the supply suddenly increases, and tenants have clear differentiation. Because the apartment rental activity is fiercely competitive in the market, many investors have difficulty finding tenants - experts warn.
Ms. Duong Thuy Dung - Senior Director of CBRE Vietnam analyzed that currently, the expected profit of the apartment rental segment brings in 6 - 6.5%/year for investors. However, few investors achieve 6.5%/year because the competition in the apartment rental market is increasingly fierce, and apartment tenants are increasingly differentiated.
Mr. Tran Quang Trung - Business Development Director of OneHousing commented that the rental profit of apartments is still more prosperous than the townhouse segment. In Hanoi, the profit from renting apartments in 2022 is 4.4%, 1.7 times higher than the rental rate of townhouses. Particularly in the West of Hanoi, the rental profit is fluctuating from 5-6%.
According to Mr. Trung, the average apartment rental price in Hanoi is currently fluctuating at around 10 million VND/month, an average increase of 4.5% compared to the same period last year. Regarding the price and price increase of the rental apartment type, Hanoi apartments currently still have the highest rental profit margin among real estate segments.
In the coming time, the market is expected to welcome more international units for new supply. Specifically, in 2024, it is expected that 2,609 serviced apartments will enter the market. From 2025 onwards, the Hanoi market will have 12 more projects, providing 1,212 serviced apartments.
The Ascott brand will manage 59% of the future supply with 2,269 units from Tay Ho View Complex and Somerset Metropolitan West Hanoi. Lotte Group will have an 8% market share equivalent to 317 rooms from The Heaven in Starlake New Urban Area. Parkroyal Serviced Suites is completing its second project, expected to be operational in early 2024 with 261 units…
Tourism boom supports hotel segment
According to the General Statistics Office, in the first three quarters of 2023, Vietnam welcomed 8.9 million international visitors, up 474% year-on-year and exceeding the 2023 target by 11%. The number of international visitors to Vietnam mainly came from the Asian market with more than 6.8 million visitors. Next were visitors from Europe with more than 1 million visitors; the American market reached 682,000 visitors.
Among Asian visitors to Vietnam, South Korea accounts for the majority with 29% of the international visitor market share and 2.6 million arrivals; China accounts for 13% of the market share, Taiwanese (China) and American visitors account for 6% of the market share.
Hanoi alone welcomed 18.9 million tourists, up 37% year-on-year and equal to 88% over the same period in 2019; of which, the number of domestic visitors reached 15.7 million, up 20% year-on-year and reaching 83% of the 2023 target. The number of international visitors reached 3.2 million, up 300% year-on-year and exceeding the 2023 target by 7%. Tourism revenue reached VND69 trillion, up 67% year-on-year.
Hanoi tourism peaked in July with about 2.4 million visitors; of which 2 million were domestic visitors and 380,000 were international visitors. August and September are low season for domestic visitors but the number of international visitors increases.
Correspondingly, the hotel supply in the Hanoi market in the third quarter of 2023 alone was recorded at 10,962 rooms, stable quarter-on-quarter and up 8% year-on-year. Hotel occupancy reached 61%, down 2% quarter-on-quarter but up 19% year-on-year. However, occupancy was still below 73% - the level recorded in the third quarter of 2019, before the Covid-19 pandemic. Rental prices in this quarter recorded an increase of 7% quarter-on-quarter and 22% year-on-year, reaching VND2.7 million/room/night.
Savills experts said that in terms of hotel supply in the coming time, Hanoi is expected to welcome 4 projects with 1,355 rooms. From 2025 onwards, 64 projects with about 10,300 rooms will be launched on the market. Nam Tu Liem District accounts for the largest future supply market share with nearly 3,000 rooms, equivalent to 26%; Ba Dinh District follows with 18% and Tay Ho District will have about 15%...
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