(Photo: JLL Vietnam)
Vietnam’s real estate market will be shaped by five main trends in 2019 according to a JLL report: the mid-end and affordable apartment segment, flexible workspaces, technology companies in the office segment, e-commerce in logistics, and hotel lifestyle.
The mid-end and affordable segment will dominate the country’s property market, with the report noting an increase in small and ultra-small apartments. About ten years ago, high-rise projects had two-bedroom apartments of about 120 sq m, but now there are no two-room apartments over 100 sq m being built.
Preferences in apartment size among both buyers and developers have changed. “Most first-time homebuyers are only able to afford larger apartments in apartment blocks far from the city center,” said Mr. Stephen Wyatt, General Director of JLL Vietnam. “But psychologically, young buyers want to live in a convenient location, so they buy small apartments with full amenities and community connections.”
Flexible workspaces, meanwhile, are becoming increasingly popular in Vietnam, largely due to the limited supply of traditional office space in sought-after locations.
According to the report, there are now 25 high-end flexible space operators in Vietnam, with prominent players including Toong, Dreamplex, Circo, Workyos, Kloud, CEO Suites, UP and WeWork.
Flexible space is also considered an answer to financial issues faced by companies compared to traditional office space, due to the lower cost from sharing space and facilities.
Early on, demand mainly came from startups wishing to rent short-term office space as well as businesses seeking temporary office locations. Co-working operators now focus on finding and approaching tenants who need to move and renovate office space into co-working models through temporary services called tailoring offices.
With the strong growth in e-commerce in Vietnam, JLL predicts technology companies will continue to hunt for ideal office space and quickly become the main tenant group. This presents an opportunity to investors who can build office space quickly to keep up with demand.
The report showed that, in 2018, Ho Chi Minh City recorded the largest office rental transaction in the last ten years, with an e-commerce giant leasing an office space of 10,000 sq m in a convenient location.
Prerequisites for technology companies in terms of office location is that it must allow it to attract talent and have convenient traffic links as well as live-work-play facilities integrated into the surrounding environment.
Revenue from online shopping activities continues to increase, so there is increasing pressure on logistics networks, supply chains, distribution and retail channels, as well as factory and warehouse networks.
According to the report, many foreign logistics and e-commerce providers are working hard to not miss the opportunity to penetrate into Vietnam. The creation of the BW Industry Development JSC, a joint venture between the Warburg Pincus Global Investment Fund and Becamex IDC, in January 2018 was a sign of the great potential in this market.
Compared to other countries in the region, Vietnam’s logistics market is still in its infancy, mainly providing low-tech products and services. With the development potential of the e-commerce market and the manufacturing sector, Vietnam’s logistics market is expected to take a new step forward in development, similar to the process other markets in the area have already gone through.
Finally, hotel lifestyle, a modern hotel model with increasing exposure to nature, is increasing. In particular, the report notes that major demand in this segment comes from millennials, who take regular business trips, travel frequently, and have multiple work locations. More than anything else, they are always looking for the experience of being part of a community.
With the shortage of hotel supply in famous tourist destinations such as Ho Chi Minh City, Hanoi, Da Nang, Nha Trang, and Phu Quoc Island, the hotel lifestyle market is receiving considerable attention from investors, especially homeowners, who seek nature-friendly properties with beautiful views.
