Corporate establishments and representative office openings have been mushrooming in big cities in recent years on high demand for office space. This is also an opportunity to rapidly develop officetel, a portmanteau of office and hotel.
Potential of officetel model
As a new model, officetel has just appeared in the two major cities of Hanoi and Ho Chi Minh City, with most projects located outside the downtown areas. In Ho Chi Minh City, there are about 40-50 officetel projects invested by many investors like Bitexco, NovaLand, Vingroup and Hung Thinh. The largest city of Vietnam is expected to have nearly 8,000 officetel units by the end of 2017. The Hanoi market has also witnessed some of its first officetel projects with a total supply of about 1,000 units. Typical projects include Dcapitale Tran Duy Hung, invested by Vingroup and Officetel Giang Vo.
Currently, officetel has a wide range of space areas for enterprises, starting from 30 square metres to over 150 square metres. In addition, this model holds a price advantage over conventional apartments of the same area.
With Vietnam’s economic integration, more foreign companies are present in Vietnam and bringing more foreign people to the Southeast Asian nation. As their stay in the country is not very long, it is not really effective to spend large sums of money to buy luxury apartments. Therefore, the officetel model is the perfect solution to this.
The officetel model also has distinct privileges towards perfect services for companies such as reception halls, office-company name boards, standard office services, private passageways, private elevators and high-speed internet systems.
At a recent seminar on this issue, Associate Professor Tran Kim Chung, Vice President of the Central Institute for Economic Management (CIEM), said that to provide a legal framework for this property type, the Ministry of Construction, the Ministry of Natural Resources and Environment, the Ministry of Finance and related parties need to take concerted action. Since this is a product of society and a good solution to the property market, the society should promote it by quickly completing the legal framework to avoid wasting resources for both the supply and demand side.
Mr Nguyen The Diep, Vice President of the Hanoi Real Estate Club, said, officetel is a novel segment of the real estate market, but is considered an inevitable development trend. Investing in this segment seems to be very right because the liquidity is very high. However, we need to complete institutions to make this segment develop with others.
The officetel model was born when the legal framework for it has not been completed yet, a common reality in the economy – the legality still lags behind the economy. What needs to be done now is to remove obstacles when officetel is not categorised as the office for lease or apartment either, because apartment cannot be used as working office by organisations and individuals according to the Law on Housing.
Commenting on this model, Mr Nguyen Van Duc, Deputy General Director of Dat Lanh Real Estate Company, said that this model is considered a hybrid of apartment and office. It not only carries the feature of social housing – the small size – but also the feature of commercial housing – the high selling price.
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