Foreign investors drawn to Vientiane for hotel, office development
Play
Foreign investors are expanding their hotel and office development into Laos, and Vientiane in particular, due to strong demand resulting from investment growth in sectors such as the energy industry, according to Colliers International Thailand.
The company’s research shows that due to the growth of tourism and business travel to Vientiane, the number of international arrivals in Laos last year was higher than in 2011, at about 3 million – probably the highest on record.
This was due to new government policies that attracted more tourists, such as visa exemptions, new airline routes and the “Visit Laos Year 2012” promotional campaign.
Laos forecasts welcoming 3.7 million visitors this year, up 14 per cent from last year’s level.
Surachet Kongcheep, Colliers’ associate director for its research department, said some 990 upper-scale hotel rooms are scheduled to be completed next year in three districts, with roughly an equal split between the three.
Many foreign investors have invested in the development of four-and five-star hotel projects in Vientiane, such as Vietnam’s HAGL and the Regal Global Investment and Development Group from Singapore.
Some large-scale mixed-use projects from foreign investors are planned for future development in Vientiane, with hotels such as the Vientiane New World, located along the Mekong River; the World Trade Centre in the centre of the capital; the Vientiane Complex; and another hotel project to be built by the BIM Group.
Many foreign investors are operating in Laos in a range of industries and they require quality office space in Vientiane with security systems, adequate parking space and high-quality management, he said.
Many foreign companies in the country are currently renting houses or shop-houses for office use.
The first office building was built in Vientiane in 1993, in Chantabuly district. However, limited available plots and increasing land prices are major obstacles to further real-estate development in the district, so many new projects are located in other districts, Surachet said.
The average range of rental rates for office buildings in Vientiane is US$5-$15 (Bt155-Bt465) per square metre per month, depending on facilities and location.
“Most office buildings in Vientiane have a high occupancy rate, as only some office buildings are located away from the main business hub,” he added.
Retail development
Meanwhile, the retail market is another interesting sector for foreign investors, although the limited population in Vientiane is still not suited to the development of a large-scale shopping mall.
The supply of retail centres in the capital is limited, and most were only added in the past few years. The level of retail centres is still lower than the international standard, and the tenant mix is also a negative factor.
“Some large-scale mixed-use projects in Vientiane are the new demand drivers for the retail business, as they include retail, hotel and office space, and serviced apartments. Therefore, Vientiane will probably become the new tourist destination in the future, and not just the transportation hub for visits to Luang Prabang, once all the new projects have been completed,” said Surachet.
“Some superstore-mall and shopping-mall developers in Thailand are looking to open their first stores in Laos, especially in Vientiane and Luang Prabang. However, smaller formats are planned, due to the limited population,” he added.
