Oakwood eyes Vietnam

Oakwood Asia-Pacific, an affiliate of Oakwood Worldwide, is focusing on three markets – China, Hong Kong and Singapore – but is not ruling out the possibility of managing properties in Hanoi and Ho Chi Minh City, where there is high demand for serviced apartments.
Oakwood Asia-Pacific business development manager Sherman Ho told Vietnam Investment Review that the company’s international clients have shown interest in Vietnam, prompting the company to investigate opportunities in the country.
“We seriously want to be here, we need to be here, and we have Oakwood clients who want to be in Hanoi and Ho Chi Minh City,” Ho said.
Oakwood Worldwide manages some 30,000 serviced apartments around the world, bringing in annual revenue of $600 million. Nearly 80 of the 100 largest companies in the world are Oakwood clients.
“If our clients want to come to Hanoi and we do not have properties here, we are forced to take them to [competitor] Somerset. We still take care of them but cannot put them into our own buildings,” he said.
Although almost all serviced apartments in Hanoi and Ho Chi Minh City are currently full, Ho believed he could “find projects that we want and owners who need companies like Oakwood to take care of their properties”.
Because the serviced apartment market is full at present, there will be space for new players to enter, he said.
“There is demand already and the supply is coming in.”
Richard Leech, Hanoi branch manager of CB Richard Ellis, a property consulting company, said the serviced apartment market in Hanoi was under-supplied.
“A lot of people who come to the city are shocked because the prices are so high,” Leech said, adding that rental prices are at $20 per square metre per month, and there are not many units available.
There are around 2,000 serviced apartments in Ho Chi Minh City and 1,400 units in Hanoi – 90 per cent of which are occupied.
Due to the high occupancy rates, it will be challenging for companies like Oakwood to enter the market since property owners have no need to bring in outside management companies unless they can prove they can push up prices, Leech said.
“It is tough to get into a buoyant market,” he explained.
However, Ho said he believes there will be enough stock released in the future to bring the Vietnamese property market to the point of saturation.
“As time passes, everybody builds to sell and saturation occurs in the market. Nobody buys anymore and people are left with an oversupply. That provides an opportunity for more serviced apartments to enter the picture,” he said.
According to Ho, Oakwood has been looking at China since 1999, where it currently has only one property in Guangzhou. The company also has six other potential properties under construction in the country, four in Beijing and two in Shanghai.