"Wave" of land return
During the difficult period, the real estate market in the country in general and the southern provinces in particular faced many difficulties. The fluctuations in the market economy have strongly impacted a series of business and trading sectors in Ho Chi Minh City, from which the "wave" of returning rented premises, apartments, offices, etc. appeared, causing this segment to suffer.
According to a report by batdongsan.com, in the first quarter of 2023, the demand for renting street-front houses in Ho Chi Minh City tended to decrease by 40% compared to the same period, with preliminary statistics in districts 7, 3, and Phu Nhuan district showing a decrease of 45-50%. The rental market is assessed to have decreased sharply after being heavily affected by the Covid-19 pandemic, with shopping malls, rental floors, and shophouses all facing liquidation.
Many rental properties in the central area of Ho Chi Minh City have signs looking for customers.
Currently, rental premises in the southern provinces such as Ho Chi Minh City, Binh Duong... are in a state of stagnation. It was noted that on Vo Thi Sau Street (District 1, Ho Chi Minh City), in front of many houses and businesses, there are a series of phone numbers and addresses for renting premises, renting cheap premises, direct owners...
Some streets such as Tu Xuong, Nam Ky Khoi Nghia, Le Quy Don, Nguyen Dinh Chieu (District 3, Ho Chi Minh City) are also covered with banners by landlords but still have no tenants or activities.
Talking to reporters, Mr. Pham Nhat Phuc (living in District 3, owner of the premises) said: "Since the Covid-19 epidemic, many business owners have started to return the premises. I have more than 200 square meters of floor space for rent, but for nearly 3 months now, I have offered it for rent but no one has paid attention. It's not because the rent is expensive, but almost everyone in my entire area has returned the premises."
Ms. Huong, living in Go Vap, Ho Chi Minh City also shared: “I have a house on Hoang Sa Street, District 1, with an area of over 60 square meters and 3 floors. Previously, I rented it for over 30 million VND/month for both business and living. However, the tenant returned it because it could not be used for business. It took me more than 2 months to find a tenant, but they were renting it so I had to reduce the price to balance it out.”
Another case is Mr. Tran Thanh Tung, living in Binh Thanh district, who has a rental space of more than 100 square meters on D5 street, Binh Thanh district. However, at the beginning of this year, the house was returned by the tenant. During the past time, the house has been posted for rent but he has not found a new tenant.
The return of premises greatly affects the rental real estate segment.
According to the reporter's records, although the "wave" of returning premises is still happening in central areas of Ho Chi Minh City, the rental price has hardly cooled down. The area on Le Loi Street, District 1 with an area of over 100m2 is being offered for rent at a price of 50 million/month (over 2,000 USD/month). The area on the frontage of Hai Ba Trung Street, District 1 has a rental price of 40 million/month (nearly 2,000 USD/month) for an area of 150m2.
Many of the most beautiful streets in the city center such as Pasteur, Nguyen Hue... still have a series of closed and vacant premises due to lack of tenants, but the rental price is still sky-high from 3,500 USD - 20,000 USD/month.
Opening a food business in District 3, but unable to hold on, Ms. Le Thi Hoa, living in Binh Thuan province, said: “Since 2019, I have opened a food business on Le Quy Don Street, District 3, renting a space for more than 30 million/month. However, since the pandemic, the landlord has not reduced the rent, customers are not coming in so I am forced to return the space and stop doing business to find another job.”
The “key” to help rental real estate turn around
In fact, the sluggishness of business premises is due to many factors, the most important of which is the rental price. The rental cost of premises will be calculated based on the land price of the area where the premises are located.
In recent times, the real estate market has experienced rapid growth, leading to high housing prices and correspondingly high rental costs. Meanwhile, many people who bought premises have used bank loans with high interest rates. When the market or economy stagnates, service businesses are affected due to lack of customers, so the need to return premises is gradually becoming more widespread.
Experts still expect and appreciate the rental segment, which will continue to bring benefits to the market in 2024.
Speaking with Nguoi Dua Tin , Mr. Nguyen Hong Hai, Chairman of VNO Group, commented: “Currently, looking at the general situation, it can be seen that the rental market is facing many difficulties, many business owners choose to close their stores and return the premises. Now that real estate is affected, industries with declining revenue have made the rental premises segment even more difficult.”
According to Mr. Hai, in addition to being affected by the economy, the landlords who return the premises also face many reasons, such as unfavorable business, changing direction, doing business online, renting virtual offices, etc. "Instead of expanding business as before, investors are gradually shrinking, cutting out unprofitable business locations or locations with reduced profits to reduce costs, and focusing investment more on one location. This is inevitable in business," Mr. Hai informed.
Office buildings in Ho Chi Minh City under construction promise to create a large supply for this segment in 2024.
Although the office, shophouse, and rental housing market in 2023 will face many difficulties, data shows that from the third quarter of 2023, this market will still be vibrant and attract the attention of investors.
Ms. Pham Ngoc Thien Thanh, Deputy Director of CBRE Research and Consulting Department, said that the Ho Chi Minh City office market has become more vibrant in the third quarter of 2023 with the appearance of two new office buildings in Thu Thiem area, Thu Duc city, The Mett and The Hallmark with a total leasable area of about 85,000m2 of floor space.
Thanks to this new supply, the total office space in Ho Chi Minh City has reached approximately 1.6 million square meters of leasable area. Most of the large leasing transactions in this quarter took place in new buildings with good quality completed since 2020.
Retail real estate rental market in Ho Chi Minh City in the third quarter of 2023, rental price in the central area for ground floor in Ho Chi Minh City reached more than 200 - 350 USD/m2/month.
The supply of rental properties is increasing.
Mr. Nguyen Hong Hai, Chairman of VNO Group said: “Currently, the most important “key” is that the rental price must be reasonable, so in order to retain tenants, it is necessary to lower the rental price to the real value of the property. However, landlords need to balance each location of the premises, as well as their financial capacity to set a suitable price. Accepting to collect lower rent than before will retain long-term tenants, while limiting the risk of leaving the premises vacant, avoiding periods of no income when having to find new tenants. In addition, landlords should create favorable conditions for tenants in terms of payment progress, so that the tenants' cash flow is flexible.”
According to Mr. Hai, the lessors and shopping mall owners have invested a large amount of money in the premises and floors for rent, so they need a number of customers who want to rent again. In 2024, there will certainly still be challenges, but if the interests of the lessor and the lessee are balanced, all parties work together and adjust prices in each area and location, then the opportunities in the rental sector will still be wide open.
Ms. Pham Thu Hoa, a real estate expert, said: “In 2023, although the market is facing difficulties, tenants and investors will pay a lot of rent, but they still have different business strategies. In 2024, Ho Chi Minh City will implement many programs to stimulate tourism, shopping services to attract tourists and strongly develop the city's specific mechanisms. This is also an opportunity for businesses to return, the office sector and retail space rental sector will also increase.”
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