'Office-tels' tipped to top HCMC real estate market
Office-tel developments, which combine residential and commercial uses in single apartments, are mushrooming in Ho Chi Minh City and are expected to lead the market in future.
Le Hoang Chau, chairman of the HCM City Real Estate Association, said the number of developers investing in office-tel projects has risen sharply in the past few years – evidence of the segment’s popularity. "Office-tel" is short for office-hotel.
A broker from Khai Hoan Land, who asked not to be named, said: "There are around 30 office-tel projects in HCM City, belonging to big companies like Novaland, Vingroup and Thao Dien."
This year demand has risen six-fold, he added.
They were being built in many districts around the city, with some of the key projects being Wilton Tower, The Sun Avenue, Golden Mansion, Garden Gate, Kingston Residence and Sky Centre, he said.
Bui Huu Phuc, investment and development director of Novaland, said that though it was a new product, it would soon lead the market thanks to low cost, high returns and the increasing demand for office space.
At a lease rate of US$20 per square metre, office-tel fetches returns of 8-12 per cent, and this would rise especially when the economy benefits from the Trans-Pacific Partnership, he said.
Since 2014 his company has developed 10 projects with 5-10 per cent office-tel units and received positive feedback from customers.
The product had the best liquidity, he said, adding it was the most popular product on his company’s transaction floor.
Office-tel units enable occupants to live and work in the same apartment, usually in studio apartments that are smaller and about 10-15 per cent cheaper than normal ones.
Offering facilities for both working and living, the units are suitable for start-ups without much liquidity, foreign companies and individuals who set up shop in the city to study the market, according to experts.
