Large serviced apartments go unrented

By Vu Le    February 5, 2023 | 06:12 pm PT
Large serviced apartments go unrented
Apartment buildings in District 2, Ho Chi Minh City. Photo by VnExpress/Quynh Tran
Although occupancy rates for serviced small apartments of 28-45 sqm for rent in HCMC stand at 90-95%, most larger ones of 90-110 sqm have been left vacant.

The owner of a serviced apartment project on Huynh Van Banh Street, Phu Nhuan District, said occupancy for small apartments had been at 90% since the fourth quarter last year.

But he added that while 100% of his one-bedroom apartments were occupied, most of his two- or three-bedroom apartments were vacant. He noted that his smaller apartments often supplied "better living space and more utilities" than larger ones.

The owner said he was now planning to separate each larger serviced apartment into two smaller ones.

"If I keep the big apartments, I will face the risk of making losses in the low season," he said. "So, the best thing to do is to increase the number of small apartments."

The owner of a serviced apartment project on Cuu Long Street, Tan Binh District, said 30-45 sq.m apartment occupancy rates were 90-95%, while occupancy rates for 60-65 sq.m apartments were only 80%.

The project doesn’t offer larger serviced apartments of 80-100 sq.m because "they attract fewer tenants," said the owner.

Savills’ latest serviced apartment report said that in HCMC, one- and two-bedroom apartments are popular due to their moderate rents. The report noted that the bigger serviced apartments are, the fewer tenants they lure.

In the fourth quarter of last year, 43% of one-bedroom apartments with an area of 45-60 square meters were rented, according to the report.

Meanwhile, only 24% of two-bedroom apartments with an area of 80-100 square meters were rented, Savills reported.

Nguyen Hong Hai, chairman of the office building and serviced apartment leasing company VNO Group, confirmed that two- and three-bedroom serviced apartments with an area of 80-110 square meters in HCMC were attracting far fewer tenants than one-bedroom apartments.

He said the reason is that the rent for a small serviced apartment is 25-35% lower than that of a large one. He then pointed to the lousy economy as a major cause of this.

"Budgets for renting serviced apartments are shrinking in the bad economy," he said. "So, it’s better to build fewer large apartments to optimize revenues and profits and avoid losses."

Hai also recommended that serviced apartment building owners separate large serviced apartments into two small apartments.

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