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Apartment for rent, Hotels have less tourists, more competitors

The 3-5 star hotels in HCM City rush to lower the hotel room rates and run sale promotion programs amid the modest growth rate in the number of foreign tourists. Meanwhile, they have to compete with apartment developers, who also provide short term accommodations.

The HCM City Department of Culture, Sports and Tourism has estimated that about 246,000 foreign travelers arrived in Vietnam in July and 2.15 million in the first seven months of the year. The figures represent a modest growth rate of 5.5 percent, a lower growth rate in comparison with the same period of the last year.

Since the number of foreign tourists increased more slightly than expected, the hotels in the city had to cut down the hotel room rates and offer preferences to guests.

Travel firms have confirmed that the room rate in HCM City has decreased. Especially, hotels have offered big preferences to the travelers from Asian markets. In general, Asian travelers book tours later than European travelers, just some days before the departure time. Therefore, the sale promotion campaigns would show effects immediately in attracting tourists

According to Bui Viet Thuy Tien, Managing Director of Asian Trails, hotels have offered the discount rates of 5-10 percent on average.

The Q2 report of Savills Vietnam, a real estate consultancy firm, showed that the hotel room rate and the average occupancy rate of the hotels in HCM City has been on the decrease.

The average hotel room rate is VND1.750 million per room per night, down by 12 percent over the same period of 2012, while the average room occupancy rate is 62 percent.

According to Savills Vietnam, the 4-5 star hotels in the center of the city have been operating better than that in other areas, but the 3-star hotels in the other areas have been

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better than that in the central area. In general, the 3-star hotels in the suburbs target domestic travelers and foreign backpackers who prefer saying at cheaper hotel rooms.   Not only does the decrease in the tourist growth rate cause a big headache to hotels, they now also have to deal with another problem – the appearance of new rivals.

In principle, hotels and apartments target two different groups of clients. While hotels provide short term accommodation services, apartments target the clients who plan long term stay. While hotels serve breakfast, the clients staying at apartments dont receive the service.

However, apartment developers now tend to scramble for clients with hotels when offering flexible room rent services.

Capri by Fraser, the apartment building which joined the market in early March, has leased rooms to the clients orders. They can choose long term renting, or rent by days.

Located in Phu My Hung urban area in district 7 in HCM City, the building has 175 apartments for rent at VND1.6 million ($75) per night and VND25 million ($1,200) per month. The above said rates include the fees for the breakfasts. This means that the clients staying at the apartments would receive the same services as if they are in hotels.

SSG Group has put the Saigon Airport Plaza building, located near the Tan Son Nhat airport, into operation. This is a complex of apartments and offices for rent, and 84 service apartments.

The rates here are VND25-29 million for a month stay and VND1.4 million for a day stay.

Life at devastated apartment block amid Saigon

120 households at the apartment block No. 727 Tran Hung Dao road, District 5, HCM City are living in fear because their houses can collapse anytime.

This street-facing apartment building is named President Building. It is only 1km from Ben Thanh market. The 13-storey building was built in the 60s, with six blocks, totaling 530 rooms.

When it was inaugurated, the building was among the highest and the most modern structures in Saigon. It began seriously downgrading since 2002. The city authorities planed to remove local residents out of the building.

After more than 5 decades, concrete poles now expose their iron cores. The building has become a dangerous home.

Hundreds of households have left the building, making it more devastated and dirty. Drug addicts and homeless people

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sought shelter inside the building. “Since 2008, families have been removed from the building, in three stages. At present, 120 households still live here because of administrative procedures,” said Tran Van Long, who is paid VND900,000 ($45) per month to guard the building.

The building is now in the worst condition. Everything is decayed and smelly. Rubbish covers every corner. However, people who are living here cannot mend their apartments. They are waiting for

the building.

Without a management board, local residents have to organize everything, from security to rubbish collection, mending pumping machines, etc.

Only old people and kids stay at home in the daytime. All apartments close their doors to avoid drug addicts. “We dont leave our rooms at night because we are afraid of seeing drug addicts,” a local said.

Though the building is dangerous, this 40-year-old woman has climbed up the stairs to the highest storey to sell groceries for ten years.

There are several families on the highest storey. This boy, 8, said he was very sad on free days when he did not have to go to school. On these days, he played with his grandmother or played computer games.

All families want to get out of the building but they have to wait for the local authorities to arrange new apartments for them.

Ministry suggests allowing foreigners to buy houses without limitation

The Ministry of Construction (MOC) has proposed the government to allow all the foreigners, who have the visas to stay in Vietnam for 3 months or more, to buy houses in Vietnam. No limitation in the number of houses on the subjects would be set.

The ministry believes that the current policies on allowing foreigners buy and possess houses in Vietnam have shown shortcomings which need to be settled.

The currently applied Resolution No. 19 stipulates that five groups of foreigners are allowed to own properties in Vietnam. Meanwhile, MOC believes that the right to buy houses should be extended to other subjects as well.

It has suggested allowing foreign investment funds, foreign banks, branches and representative offices of foreign invested enterprises operational in Vietnam to buy houses. Only diplomatic and non-government organizations would not be able to do that.

As for foreign individuals, the ministrys viewpoint is that all the foreigners with the visas to stay in Vietnam for 3 months or more should be allowed to possess houses in