Serviced apartments: Rents increase
Favored by many groups from tourists to businessmen and experts, the serviced apartment model in big cities is witnessing a strong increase with good exploitation rates. In the fourth quarter of 2018, the rental price of serviced apartments increased compared to the previous quarter.
Grade B supply added 195 units from several new projects. Total supply was over 5,700 units, up 3% quarter-on-quarter and 20% year-on-year; the highest in the past 5 years. Average rent was USD25/m22/month, up 1% QoQ and YoY due to a 4% YoY increase in Grade A and B rents. Occupancy decreased -1 ppt QoQ and -3 ppt YoY due to increased supply. Over the next 3 years, 1,700 units from 12 projects will enter the market; of which, international developers are estimated to account for approximately 77% of future supply.
Apartment: Impressive
A large number of apartments and luxury apartments will be launched in the coming time. However, in the past time, there were 23 new projects along with 13 projects launching the next phase, providing more than 9,500 units. There were more than 18,300 primary units in this quarter, down -3% QoQ and -44% YoY. Transactions reached 11,000 units, up 10% QoQ but down -27% YoY. Absorption rate peaked at 60%, up 7 ppts QoQ and 14 ppts YoY. Grade C apartments accounted for 58% of total sales and absorption rate reached 64%. By 2021, the market is estimated to have more than 154,000 apartments from 100 projects launched, of which more than 66,000 units were launched in 2019. This is certainly positive and impressive news for this segment.
Hotels: On the rise
Supply was stable QoQ and down -4% YoY, mainly due to the temporary closure of a 5-star hotel with over 300 rooms. Occupancy in 2018 reached 70%, the highest in the past 5 years. During the peak international tourist season, all categories improved by 6-10 percentage points QoQ. Average room rates increased sharply by 10% QoQ and 6% YoY due to improvements across all categories. According to the Ho Chi Minh City People's Committee, there were 7.5 million international arrivals to the city in 2018, up 17% YoY. In 2019, this figure is expected to increase by another 14% YoY.
Villas and townhouses: Limited supply
Five new small-scale projects supplied 390 units to the market. Primary supply reached over 1,280 units, up 5% QoQ but down -37% YoY. Transaction volume increased 64% QoQ but down -57% YoY due to limited supply. Go Vap led the market with 33% of total transactions. Primary land supply reached over 1,970 units in the quarter. This market segment achieved a high absorption rate of 77 percent. From 2019 to 2021, 22,650 units/lots will be supplied to the market. Suburban districts such as District 9, Binh Tan and Binh Chanh will contribute 56% of future supply.
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