(Photo: Viet Tuan)
Vietnamese real estate developer the SonKim Land Corporation and Samsung Electronics Vietnam recently announced a strategic cooperation agreement to introduce smart home models in the country, aiming to take the customer experience to the next level. The partnership between one of the leading real estate developers in the country’s luxury real estate segment and the No. 1 brand in home appliances and digital devices is expected to raise the bar in terms of quality luxury apartments.
Smart solutions
Smart homes are a global trend these days and a range of IT services are used by developers to provide various products and services. The smart home market remains quite a new concept in Vietnam and only a few projects in the luxury market use smart home systems. But these are quite simple and technologically behind those used in other countries, according to Mr. Andy Han Suk Jung, CEO of SonKim Land.
SonKim Land and Samsung Electronics will cooperate and co-develop smart solutions to make SonKim Land’s homes smart by linking various cutting-edge technology products from Samsung Electronics. The cooperation will also include Internet of Things (IoT) solutions. “We have agreed to apply Samsung’s system at SonKim Land’s The Metropole Thu Thiem project and Samsung will give priority to us in supplying the latest smart home solutions and products in Vietnam,” Mr. Andy said.
Another leading high-end real estate developer, Alpha King, has focused on using smart solutions for its projects in Ho Chi Minh City in the early stages of development. Its projects offer cutting-edge technologies unlike any other project, with the use of BIM and SMART solutions. BIM, which stands for “Building Information Modelling”, is a system used to monitor all common facilities, areas, and security measures. It also helps to manage design, construction, and operations. Meanwhile, SMART, known as a “Smart Building” solution, allows clients to interact with their homes via their smartphones.
The local market is still fragmented, with customers only having access to disparate smart appliances, according to Mr. Jimmy Chan, CEO of Alpha King. “We aim to create a totally interconnected, easy-to-control environment, a unified smart home experience,” he said. “The technology used in our luxury residential projects will offer owners remote control monitoring of common household devices and improved utility savings. Moreover, we will develop something even bigger than smart home - smart buildings - and also look to partner with leading global companies in the smart home sector to bring the best smart home experience to customers.”
As Vietnamese homebuyers have been increasingly adopting smart technologies in order to catch up with worldwide trends, the local real estate market has become the apple in the eye of both domestic and international technology providers. Vietnam holds great potential to strongly promote growth in the smart home sector, including high and rapid urbanization and its young population’s rapid access to innovative solutions, according to Mr. Luu Le Minh Khai, EcoBuilding Director at Schneider Electric Vietnam. “Vietnamese people are now focusing more on life-quality investment, by increasing their living environment with the application of smart technological devices in their own apartments and companies,” he said.
Schneider Electric’s figures show that 7,000 apartments with its smart technologies were delivered in 2017 and 2018. Some luxury projects have display homes with Schneider Electric’s smart home systems. Mr. Khai said the company not only provides stand-alone smart home systems but also the architecture, so that owners can integrate different products and services by using IoT open architecture called EcoStruxure Building. It provides analytic services with global expertise to recommend operators change the way they operate the system for more energy efficiency and safety and ensure occupants’ comfort and productivity.
Smart building technologies not only improve energy efficiency, operation costs, and project life-cycles with future proof technology but also increase the value of the building and rentals by 11 per cent compared to normal buildings, he noted.
Preeminent advantages
Revenue in Vietnam’s smart home market will amount to $83 million in 2019, according to global market researcher Statista. Revenue is expected to show a compound annual growth rate (CAGR) of 51.7 per cent in 2019-2023, resulting in a market volume of $437 million by 2023. Household penetration in Vietnam is to be 1.2 per cent in 2019 and hit 7.8 per cent by 2023.
Vietnam’s smart home market has achieved remarkable growth, with the country being ranked 45th in the world. Mr. Chan sees that there are a lot of smart appliances in many Vietnamese households, and these devices see impressive sales figures every year. “This shows how much customers here care about improving technology in their homes, but these are stand-alone devices and haven’t yet met customer demand for a total smart home solution. Therefore, when real estate developers step up their game and provide seamless interoperability of all devices in the home electronic network, that will definitely draw attention from savvy customers,” he said.
Similarly, Ms. Tran Minh Ai, Director of Property Management at Savills Ho Chi Minh City, said that smart technology is an indispensable element in luxury five-star products for high-end projects in prime locations. For projects with a location disadvantage, technology enhances property value and increases product competitiveness against those in better locations. Vietnamese customers are fond of new technologies and many are tech-savvy, so promoting a smart residential project managed by new technology will certainly attract customers.
However, smart technology does not provide only superficial value, she added. When technology is applied in common areas, theoretically developers could use electricity more efficiently and save on operational costs. By using smart technology in property management, project managers could save time and human resources in tasks such as collecting service fees or utility bills or handling requests from residents.
Smart home technology offers a trendy add-on for apartments, according to Mr. Nguyen Trong Thuc, Senior Manager of Research and Consulting at CBRE Vietnam, and can help garner premiums for the home seller thanks to perceived higher quality from this add-on, provided that the “smart” system is working well. “Elsewhere in the world, smart home solutions are becoming important product differentiators by developers of residential projects,” he said. “In Vietnam, the availability of smart home features helps make a development more attractive but is still just something that is ‘good to have’ at the moment.”
He added that even though there are still many challenges, with a significant rise in supply of condominium projects in the past few years, a strong pipeline in the future, and a boom in tech startups, Vietnam’s smart home market shows a lot of potential, from both demand and supply perspectives.
Certain limitations
For projects using basic technology system like auto-curtains or sensor lighting, according to Mr. Andy from SonKim Land, the instalment cost accounts for some 3-5 per cent of total construction spending, while full smart technology options will cost up to 10-15 per cent. Meanwhile, according to Mr. Khai from Schneider Electric, real estate developers build and operate an apartment building for 50 to 100 years. “With the growth in technology nowadays, if they use old technology the building will be not suitable in the future,” he said. “In general, in the whole life-cycle of a building, 25 per cent of costs are for construction and 75 per cent for operations and maintenance,” he told VET.
Mr. Thuc said a property’s price and location and a developer’s brand and perceived product quality are generally the biggest factors affecting a homebuyer’s decision in Vietnam. For mid-end and affordable homebuyers, their focus is mainly on price, quality of construction, and safety standards, which became more important than ever after a major fire in Ho Chi Minh City early last year. High-end and luxury homebuyers may demand more auxiliary services and add-ons, and that’s where smart home may have a chance, especially with high-end developments in a not-so-prime location.
Currently in Vietnam, smart home solutions seem to be used more like a marketing spin by developers amid a very competitive market. Some smart home solutions providers find it difficult to attract business in Vietnam, which means when it comes to actual implementation and instalment, some developers may not meet expectations. There have been some concerns from homebuyers that developers who promise smart home solutions may just use this to stretch their prices, while in the end the house may turn out not so “smart”.
For Alpha King, the biggest challenges for real estate developers is technological fragmentation in the smart home industry due to the plethora of devices, standards, and networks in the ecosystem, and the difficulties inherent in linking and integrating the numerous and disparate smart home devices and systems. In order to create a unified smart home experience, the developer must have a really strong background in technology. Another challenge is the cost.
CBRE Vietnam has pointed out that many developers are finding it costly to invest in smart home systems, as investing in expensive products from well-known vendors pushes up the sales price, which may put off some buyers, while investing in products from lesser known vendors may put their reputation at risk if the systems are not working well. However, over time, as technology becomes cheaper, this can be overcome.
As Vietnam is still in the early stages of smart home technology adoption, smart solutions providers need to remain patient and can probably start with big developers in the high-end/luxury segment. Once those projects come into operation and residents are satisfied, they will then have a track record to further entice later developers to adopt their technologies. Vietnamese customers, as well as developers, tend to catch up with global or regional trends pretty fast, which is a good start.
