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Better to buy houses in City, rent in Ha Noi: CBRE

Update: September, 29/2014 - 07:40

Ha Noi City. The prudent thing to do apparently is to buy houses in HCM City and rent them in Ha Noi.— VNS Photo Nguyen Manh Ha

by Le Hung Vong

House rentals are vastly different in HCM City and Ha Noi. For a similar quality apartment in a comparable location, the rent in HCM City is 10-20 per cent higher than in Ha Noi. This means residential properties in the southern hub can provide better yields than those in Ha Noi for landlords, according to a report released by CBRE.

To estimate the cost of renting, CBRE calculated for comparable apartments for 15 years. The calculation also takes into account the opportunity cost if the monthly rent had been deposited in a savings account.

The current monthly rent for a similar apartment would be VND6 million (US$281) in Ha Noi and VND7 million ($328) in HCM City. The increment rate is assumed to be 2 per cent annually. The rent for 15 years would then come to VND1.29 billion ($60,563) in Ha Noi and VND1.5 billion ($70,422) in HCM City.

The prudent thing to do apparently is to buy houses in HCM City and rent them in Ha Noi.

But in Ha Noi, if the interest rate environment remains at current levels, buying is better if buyers can make a down payment of at least 56 per cent of the property value.

Also, it is better to buy in Ha Noi when loan interest rates go below 11.6 per cent, while for HCM City the figure is 13.9 per cent. It again means that, in the current interest rate scenario, it is better to buy in HCM City.

Depending on the budget, a buyer can go for either landed houses or high-rise apartments. Generally, landed properties are more expensive and the absolute value of a unit could range from over VND4 billion ($187,793) upwards, depending on the location.

Generally speaking, rental markets in both cities have been mainly catering to students, workers, and professionals from other provinces and expatriates.

Rental properties vary from landed houses to high-rise apartments to meet various needs. In recent years some property owners have developed mini apartments for rent to meet the demand from young and single professionals who like to live in independent apartments with basic en suite facilities but cannot afford mid- or high-end apartments.

With respect to location, rented properties are scattered in almost every district in the two cities. Although the most common type of rental accommodation in Ha Noi and HCM City is still shared rooms and space in landed houses, apartments are preferred by young professionals since they are usually more modern, being built in recent years, are better managed, and provide tenants with better parking facilities and security.

Depending on the location and grade of the building, rents can vary from VND5 million ($234) to VND20 million ($939) or higher per month. Payment of management fees is borne by landlords or tenants depending on negotiations.

The report says rapid urbanisation in Ha Noi and HCM City is attracting increasing numbers of immigrants to these cities to work.

According to data from the Viet Nam General Office for Population and Family Planning, the number of immigrants in Ha Noi and HCM City is growing annually. The annual average rate of migration is 1.5 per cent for Ha Noi and 2.2 per cent for HCM City, which brings an estimated 100,000 people to Ha Noi and 150,000 to HCM City every year.

Around 85 per cent of the immigrants are aged 15 to 29. The influx of Generation Y immigrants to the cities is expected to boost demand for rental properties and the rental market's prospects.

In addition, since Viet Nam has a young population while property prices remain too high for most young people, it is expected that rental properties will be growing.

The rental market is also expected to become better organised and regulated, enabling potential tenants to find a good range of options matching their budgets and lifestyles rather than being forced to try and buy their own properties because they cannot find suitable renting options

VNPT in Myanmar

The Viet Nam Post and Telecommunications Group (VNPT) opened its representative office in Yangon, Myanmar, last week in the presence of the Vietnamese Minister for Information and Telecommunications Nguyen Bac Son. The office is expected to help the mobile service provider attract more customers and establish partnerships with Burmese businesses.

At the opening ceremony VNPT signed memorandums of understanding with local telecom companies A1 Construction Co Ltd, Terabit Wave, Elite Telecom Public Co Ltd, and Fortune International.

The rep office is also expected to help promote co-operation in telecom between the two ASEAN members.

Under the MoU signed with Elite Telecom Public Co Ltd, which is affiliated to Elite Tech and Meridian Capital Asia Ltd the three parties will co-operate to carry market studies and make plans for setting up a joint-venture telecom company and applying for a licence to provide internet services in Myanmar.

Speaking at the ceremony, VNPT Chairman Pham Long Tran said his company would join hands with the Myanmar Ministry of IT and Telecommunications to boost co-operation in IT and telecom between the two countries.

VNPT considers Myanmar a key market in its investment strategy and has, since 2011, carried out trade promotions there. The new rep office is the first step in creating a foundation for long-term business and investment activities there.

Myanmar is considered a promising market, with only 5.4 million out of its 60 million population using mobile phones as of the end of 2012. This rate (9 per cent) is far lower than in other neighbouring countries like Cambodia, Laos, and Thailand where penetration rates are 70 per cent, 87 per cent, and 100 per cent.

Myanmar expects to increase the penetration rate to 75 – 80 per cent by 2015 – 2016, VNPT said.

Coconut shortage

Many coconut processing firms in the Mekong province of Ben Tre, a major coconut growing area, are considering import of coconuts due to a severe shortage caused by fierce competition from traders.

This was the main topic of discussion at a seminar held by the Ben Tre authorities and the Viet Nam Coconut Association in HCM City on August 29.

Huynh Khac Nhu, chairman of the Tra Vinh-based processor Tra Bac JSC (Trabaco), said Vietnamese coconut products sell well abroad. Trabaco achieved sales turnover of VND330 billion ($15.6 million) last year mainly from exports of products such as dried copra, canned coconut milk, and activated charcoal.

However, local supply of coconut fibre this year has only met fifty per cent of his company's needs. "In the rainy season (May to October), when Chinese traders do not come to buy coconut, the [supply] can meet 80 per cent of our demand," he told Sai Gon Tiep Thi (Sai Gon Marketing) newspaper. — VNS

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