As Vietnam’s property market struggles to cope with a prolonged slump driven by excessive high-price supply, Ulf Bieler, senior portfolio manager of CBRE asset services in Hanoi, offers some insight for success in difficult times.
The well-worn phrase “location, location, location” in real estate suggests that all other factors pale into insignificance when it comes to the value and desirability of a property. Location is of course important. But is it everything?
CBRE would argue that for major commercial buildings in this time of advanced technology, increased focus on green credentials, and tougher local and international competition, this simply isn’t the case.
If you also consider the effects that a tough macroeconomic environment has on asset revenues, then strategies to unlock hidden potential or drive operational cost efficiencies become a primary concern for investors and landlords to allow them to achieve profitable returns under each exchange before they were sold on again.
These sales are starting to catch the headlines in Vietnam, but like any other international country, this isn’t a true reflection of the cycle of real estate.
Maybe now is the right time to focus on the less-exposed side of real estate and the strategies that Vietnam’s property owners of all sizes can employ to generate value from their portfolios whatever the environment. Like any business owners, Vietnamese landlords are continually looking for ways to enhance their revenues with tactics that include positioning their building, playing with its unique selling points or upgrading it to attract the right tenants. The importance of location should be downplayed. Of course, highlighting the central business district credentials of a building like Bitexco Financial Tower in Ho Chi Minh or Pacific Place in Hanoi – competitors to any of the A1 properties in the area – location has been important to its commercial success.
In non-core locations, creating a good tenant mix, and looking to minimize the issue of access with creative transport solutions, can create success in unlikely locations – Savico Megamall Long Bien Hanoi, for example. Some landlords may opt to theme their building in a bid to attract a certain tenant type or weigh towards a certain sector. A good example is the newly opened Trang Tien Plaza Hanoi, where the owner has targeted a critical mass of high-end retailers to boost attraction. Others count on high class and unique entertainment of the masses like the soon to be opened Royal City in Hanoi, where indoor ice skating, Water Park and amusement park are expecting the crowds.
Operational cost efficiencies were the last thing on these investors’ mind as many assets didn’t even sign-led retailers, creating a very successful destination for their building to complement its success.
Cost control is the other key weapon in property owners’ arsenal, and the number one focus is driving greater operational efficiencies for their buildings.
Far from the bean-counting nature that this tactic might suggest, today’s property managers have access to technology that wouldn’t look out of place in a NASA spacecraft. Technological platforms can give a firm a distinct competitive advantage in a fast-moving dynamic environment, such as Vietnam is going to be. In what has traditionally been a people-intensive industry, automation and other smart solutions can create impressive service and cost efficiencies.
Green best practices are also starting to get some real traction in Asia. Far from being merely “nice to have,” energy management offers significant savings. A study by CBRE’s Australian business in 2011 demonstrated that straightforward operational strategies targeting greater water and energy efficiency delivered a 9.2 per cent cut and 26.5 percent reduction to gas and electricity usage, respectively, in one calendar year at one landmark Melbourne building.
So how does mundane sounding property management fit in cities like Hanoi or Ho Chi Minh City, where the property market is so deeply ingrained into its residents psyche?
Well, after 10 years of living and working in these great cities, I know that changes can happen quickly if one finally starts to work on it.
However, through the cycle – but especially at times of economic uncertainty as we are seeing now—investors, landlords, and businesses, cannot rely on location alone to guarantee rosy returns from their real estate.
Đăng ký: VietNam News