The suburbs a new frontier

Grand Plaza is a new kid on the block

In its quarterly report, Savills said that demand in districts including Thanh Xuan, Tu Liem, Long Bien and Gia Lam had not been met, as there were no existing serviced apartment projects there.

Demand was increasing, especially in areas next to industrial zones in the northern areas, according to Savills.

Around Hanoi there are now dozens of industrial zones, many located in Gia Lam, Dong Anh, Thach That and Soc Son districts.

The central business districts of Tay Ho, Hoan Kiem, Hai Ba Trung and Dong Da now had the highest occupancy levels. Tu Liem and Cau Giay districts have become an emerging area with a range of large-scale projects such as Charmvit and Keangnam, with a remarkable number of serviced apartments.

At the end of last year, Hanoi had a total of 41 projects supplying 2,250 units to the market. Projects with the largest number of serviced apartments (from 206 to 270 units) all belonged to the Grade A segment, which accounted for approximately 55 per cent of the total supply.

The latest arrival was the Charmvit Grand Plaza Serviced Residence with 180 units, which opened at the end of last year .

Because of a stable supply, serviced apartments had recent occupancy rates of about 92 per cent, and average achievable rent was $26.4 per square metre per month.

However, grades B and C faced with stiff competition from private houses, which offered tenants more privacy.

A CB Richard Ellis report said the number of inquiries for serviced in 2010 increased against 2009, signalling a recovery of the economy. Part of the demand has been met by an emerging buy-to-let market in large projects such as Vincom Park Place, Golden Westlake and Sky City Tower.

According to Savills Vietnam, a big number of serviced apartments of more than 1,200 units would be supplied to the market at the end of 2011, occupying more than half of the total current supply, at roughly 2,250 units.

Unfinished projects contributing to future supply would be the Keangnam Landmark Tower with 387 units, Crowne Residences with 135 units, Elegant Tay Ho with 100 units and Hoa Binh Green Apartments with 40 units.

The supply in coming years may triple when 31 known future projects come online. Eleven of these 31 projects should provide approximately 2,600 units. The number of units in the other 20 projects is not yet clear.

CB Richard Ellis stated that increasing supply would intensify competition that will likely have an impact on market rents in the medium to long term.