Ascott to invest US$100m to double service apartments in Vietnam

Service apartment operator Ascott Group plans to invest US$100 million over the next three years in Vietnam.

The investment will double the number of its existing service apartments in that country to about 1,800.

Currently, the company has about five existing service apartment properties under the Somerset brand in Hanoi and Ho Chi Minh city, offering about 900 units.

Another three properties, with some 490 service apartments, are currently being developed in Vietnam.

Going forward, the company plans to introduce its two other brands of Ascott and Citadines to Vietnam.

Ascott is a subsidiary of CapitaLand, one of Asia’s largest real estate companies.

Demand for service apartments in Vietnam has risen since Ascott opened its first units about 16 years ago. And Ascott sees more demand ahead because Vietnam, an emerging market, is attracting many infrastructural investments from foreign companies.

Alfred Ong, Ascott’s managing director for Southeast Asia and Australia, said: “That (demand) would come by the way of foreign companies coming to Vietnam to be involved and be part of this infrastructure development. And that would mean that when these people come into this country, they’ll need quality accommodation.

“People who are moving into these assignments require long-stay accommodation and service apartments would be the right type of accommodation that would house this group of people.”

Within Vietnam, Mr Ong said, Ascott is looking for potential expansion sites not just in Hanoi and Ho Chi Minh. It is also looking for opportunities in Vung Tau, an hour’s drive from Ho Chi Minh city, and Cantho, a major port and agriculture area about two hours flight from Ho Chi Minh.

Aside from further investments in Vietnam, Ascott is also looking at expanding in countries like Indonesia, Malaysia and the Philippines.

As for Singapore, the company is considering opening more Citadines service apartments.

Last year’s economic crisis did not prevent Ascott from posting over 80 percent occupancy in its service apartments.

It says the rate could pick up strongly in the second half of this year.

The company also sees the current average daily rate of US$100 per service apartment increasing by up to 10 percent in the second half of the year.

Residential properties in Vietnam are also on the upswing.

CapitaLand’s Mulberry Lane development in the Mo Lao new urban area of Ha Dong District in Hanoi is scheduled to be ready by end 2014.

As at end May, it has sold 545 units of the 768 units released for sale for up to US$1,800 per square metre. Another 700 units will be released for sale by the second half.

The units cost between US$1,500 and US$1,800 per square metre. These prices represent a 30 percent premium over other local completed projects.

Such an apartment with a loft concept is the first of its kind in Vietnam.

It is attracting mainly Vietnamese buyers who are paying in cash. Many of them are businessmen and professionals.

CapitaLand says the demand for such housing is enormous because many upper middle-class Vietnamese are aspiring to own such apartments.

Yip Hoong Mun, chief representative of CapitaLand (Vietnam) Holdings, said: “The project was launched towards the end last year when the economic crisis was in place. But because of the fundamental demand for good quality projects, the take-up rate was not really affected by the crisis in Vietnam.

“The price, compared to local completed projects, is in the premium of 30 percent partly because of the quality of the projects we have.

“But that doesn’t really affect the take-up rate because the local customers really aspire to own quality projects that can be completed in time.”

CapitaLand wants to grow its Vietnam presence from the current one percent to 10 percent over the next three to five years.

Source : Channel NewsAsia – 7 Jun 2010

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