The average length of stay at our properties in Vietnam is more than seven months.
Gross Rental Income
(S$’000)
Agreed
Property
Value
(S$’million)
FY 2014 FY 2013
Somerset Chancellor Court Ho Chi Minh City
8,232
8,207
69.3
Somerset Grand Hanoi
12,984 13,626
105.7
Somerset Ho Chi Minh City
5,123
5,641
66.8
Somerset Hoa Binh Hanoi
6,079
6,034
54.9
Somerset West Lake Hanoi
2,445
2,581
29.4
Revenue Per Available Unit (S$)
FY 2014
FY 2013
Somerset Chancellor Court Ho Chi Minh City
104
103
Somerset Grand Hanoi
109
113
Somerset Ho Chi Minh City
84
93
Somerset Hoa Binh Hanoi
76
73
Somerset West Lake Hanoi
73
78
2014 Review
EIU reported that Vietnam’s GDP grew 6.0% in 2014, higher than that of 5.4% in 2013. The
improvement is mainly driven by recovering of consumer confidence and improvements in
manufacturing and exports. Additionally, the economy also benefited from increasing credit growth
and investment from the manufacturing sector. Vietnam is also becoming an increasingly attractive
destination for both corporate and leisure travellers. In 2014, the country welcomed 7.9 million
international visitors, representing an increase of 4% YoY.
Demand for serviced residences has been muted in Vietnam due to supply from buy-to-let
apartments and the entrance of new international projects. Due to uncertainties in global markets,
many multinational companies reduced their budgets for staff accommodation, consequently, putting
pressures on ADRs. Overall RevPAU declined slightly by 2% YoY from S$93 to S$91 though
occupancy remained stable at approximately 85%. The continual inflow of FDI from neighbouring
Asian countries such as Korea and Japan has kept occupancy high despite declining room rates.
In the commercial space, market rental rates in Hanoi has fallen 9.6% YoY due to influx of new supply in
Central Business District Hanoi. Despite that, Somerset Grand Hanoi which comprises offices and retail,
is located in the CBD Core and, has consistently outperformed other Grade A office buildings in Hanoi,
fetching close to 25% higher rental rates. As part of our active asset enhancement programme, we
believe there is further upside to be enjoyed by renovating the office and retail component of Somerset
Grand Hanoi. As such, refurbishment works have commenced in 3Q 2014 and are expected to complete
by end of 1Q 2015. In addition, we have also embarked on the phased refurbishments at Somerset Ho
Chi Minh City in 2Q 2014 with phase 1 expected to be completed in 1Q 2015.
2015 Outlook
EIU forecasted that Vietnam’s economy will grow by 6.2% in 2015, and private consumption will
remain a major economic driver, supported by remittances from overseas Vietnamese. Competition
in the hospitality sector will become increasingly intense due to the wider selection of
accommodation options in both Hanoi and Ho Chi Minh City, coupled with tighter corporate
accommodation budget. Smaller unit sizes will be favoured due to tightening of accommodation
budgets of corporates. As such, we will continue to leverage on Ascott’s strong brand presence in
the market by focusing on the long-stay corporate business while ensuring top-notch service quality
and efficiency to meet the challenges in the industry.
Pursuing Growth | 81
