Hometel – An emerging market segment
Hometel is a combination of “Home” and “Hotel” which is designed to accommodate an owner’s long term residing purpose for young families, foreigners working in Vietnam, foreign visitors or people having long business trip in Vietnam.
Investor of hometel will charge and earn rental income directly from customers, not through the developer. The investors will self-perform the leasing activities, decide the rental and take control on the profit from their investment. This is the key difference compared to Condotel and ultimately results in a Hometel being more favorable.
Despite existing challenges as a new market segment; hometel is being considered a potential portfolio for investors in term of 3 categories: increasing rental yield, buy to let, used as second home. According to CBRE, the rental yield for hometel is 0.4% higher than 2017 - reaching 4-5.7% per annum.The location with the most potential for highest rental yield is the West of Hanoi peaks at 5.7%.
Hometel brings new fresh air to the market where buyers have more security over the freehold ownership rather than definite ownership like condotel. It is believed that this market segment will grow dramatically in the near future as the supply in prime location is still limited and the demand for hometel by foreigners living in the big cities of Vietnam is increasing.
Hometel dominates second home market in coastal cities.
According to G5 Property Services JSC (G5 Property), Hometel projects will bring most advantages and benefits to investors and developers in the coastal cities where tourism is the main focus such as Ha Long, Hai Phong, and Nha Trang. These cities are becoming hot destinations for tourism, as well as fruitful land for hometel developments due to increasing number of tourists and wonderful, natural sightseeing opportunities.
In order for hometel to succeed, developers have to make sure that they have the right master plan, premium location in the tourism cities, and most importantly, the developers must have sufficient funds to develop the projects.
The hometel segment will outperform other market segments in the second home market. However, it is still a new emerging market and therefore investors should prepare strong investment strategies, and must look at both the potential and the challenges of this market segment in order to maximize their investment profile.