City rental market continues slump

Update: April, 08/2017 - 09:00
As the rental market continues to slump in HCM City, property owners are struggling to find tenants for their apartments. –VNS Photo Anh Vũ
Viet Nam News

HCM CITY – Many investors in HCM City are struggling to rent their apartments as the market continues its tepid streak that began in early 2016, according to the Đầu Tư (Việt Nam Investment Review) newspaper.

For example, the owner of a luxury apartment in District 1 is renting a unit for VNĐ24 million (US$1,054) per month, but he bought it for VNĐ4 billion. To attract tenants, the owner, Hùng, has furnished it for VNĐ300 million.

“The apartment is fully furnished and has a nice location, but it has been on the market for two months and only a few people have visited, and then they leave,” Hùng, the owner, said.

Trần Thị Thúy is also renting an apartment in Chu Văn An residential building in Bình Thạnh District.

To lower rental costs, Thúy chose not to furnish the apartment and set the price at VNĐ7 million per month. However, it has been three months and the apartment has not attracted any tenants.

The townhouse segment in the city is also facing problems finding renters.  

Tuấn, for example, has had problems renting his three-storey house located on Trương Quốc Dung and Nguyễn Văn Trỗi streets in Phú Nhuận District. He has lowered the rent to VNĐ50 million per month from VNĐ80 million.

Though the “for lease” sign has been hanging outside for four months, not one person has called, he said.

According to property website, rental prices for apartments in districts 2, 7, 9 and Bình Thạnh have also declined.

For example, in Bình Thạnh District, monthly rent in Vinhomes Central Park, Sài Gòn Pearl, Riverside, and Saigonland apartment buildings has been lowered by VNĐ2-5 million per apartment.

District 7, which has the highest occupancy level of all city districts, is also experiencing a price slump.

In residential buildings like Phú Hoàng Anh, Hưng Phát, Hoàng Anh Gia Lai and Era Town, a 60-70 sq.m apartment rents for VNĐ7-10 million per month, compared to VNĐ12-15 million last year.

Several high-end properties like Him Lam Riverside and Sunrise City are seeing a price drop in rentals as well.

Nguyễn Huy Vũ, head of BANVIETLAND Corporation, told Đầu Tư that too many apartment buildings had been built in the city and that investors who bought apartments within the last eight years had been unable to resell them and are now renting them.

With supply exceeding demand, the market has become even more competitive.

Vũ Văn Sang, a private homeowner who rents three apartments in Phú Nhuận and Thủ Đức districts, said:  “Part of the reason is that investors tend to buy apartments because of rental profit commitments made by housing developers. But it’s the investor’s job to find tenants, not the developer’s.

“On the one hand, this is good because it makes the market more professional, but, on the other hand, it increases supply. Amateur investors like me cannot compete with professional corporate players. No wonder the market is slumping.”

Sang said he planned to sell two of his apartments and find a new investment to get rid of the burden of his property loan.

Lê Hoàng Châu, chairman of the HCM City Real Estate Association, said the rental market would continue to face even tougher conditions because of the imbalance in supply and demand.

Property speculators typically buy luxury apartments to rent, but most Vietnamese residents cannot afford them, while demand from expatriates living in the city is not high, he said.

The uncontrolled purchases of apartments and investors’ unrealistic expectations of the market have adversely affected the rental and property market, he added.

“Just look at residential buildings at night. How many apartments have lights on and how many don’t? The reality is that many residential apartments bought by buy-to-let investors are not occupied,” Châu said.  —VNS