CBRE Vietnam’s HCMC property market report for the third quarter reveals that Airbnb is becoming a formidable competitor to traditional players.
Hotel and serviced apartment tariffs outside the city center are leveling off and on the brink of declining as a result of competition from apartments leased on Airbnb and others.
CBRE’s senior director, Duong Thuy Dung, said since 2016 a total of nearly 100,000 apartments have been built and sold in Saigon, and a large proportion of them are on Airbnb.
So far this year only 43 new properties have hit the HCMC serviced apartment market. This low number was because investors had to consider reducing supply to avoid the competition from short-term lease apartments, Dung explained.
Nevertheless, grade A serviced apartments in the downtown area saw high occupancy rates thanks to their superior location and inherent differences in brand and utility, she said.
But grade B and C serviced apartments are under pressure, as are hotels.
CBRE study, released in September, showed demand for three-star hotels have been gradually falling because of growth of Airbnb in both HCMC and Hanoi.
Airbnb, launched in 2008, has over five million registered rental properties in 191 countries, while the 10 largest hotel chains in the world only have 6.1 million rooms.
As of August this year Hanoi and HCMC had 21,994 properties on Airbnb. The average rental is around $36 per room per night in Hanoi and $44 in HCMC, making them very competitive.
CBRE concluded that with their rapid expansion in the Vietnamese market, short-term room rental services are now a direct competitor to three-star hotels due to the similarity in their prices.