HA NOI (VNS) — Three years ago, Le Dinh Toan spent all of his family savings to build a house for foreign renters. He even got a bank loan, figuring the inflow of rent money would soon allow him to pay it back.
Sure enough, the five-storey house by West Lake soon filled with foreign renters.
But today, only two people live there, even though he lowered the rent by one-third in a desperate bid to attract tenants.
"I am very worried because I signed a contract to rent my current apartment for four years and have already paid the rent," Toan told Dat Viet newspaper. "I might have to sell the house to repay the bank loan."
Due to the economic downturn and real estate market freeze, many houses like Toan's are now lying vacant.
A huge number of houses intended for foreign renters have been built, despite declining demand, according to Nguyen Van Binh, who works at a real estate office in To Ngoc Van Street, Tay Ho District.
Vice chairman of the Quang An Ward People's Committee Dang Van Hoi said that despite the economic downturn, the amount of families renting to foreigners increased in the past three years, with 800 in total.
They provided VND13.2 billion (US$634,000) in taxes to the ward budget last year but are expected to provide only VND12.8 billion ($615,000) this year, according to Hoi.
Binh said that most landlords had lowered rents by 10-20 per cent since last year.
He estimated that one-bedroom apartments rented for US$500-700 per month and two-bedrooms for $800-1,500.
Do The Thiep, director of Duy Hoang Minh Company, owner of an apartment block in Quang An Ward, recommended landlords invest more in equipment and services.
"Those offering professional services will have a competitive advantage," he said. Landlords are also offering free room cleaning, security guards and car and motorbike services to retain clients, Binh added.
According to Le Ngoc Son, director of a real estate firm in Ba Dinh District, the economic recession made many expats tighten their belts. As a result, he predicted, the rental housing market would be down until at least the end of this year. — VNS