In recent times, the difficult economic situation has caused many service industries in Ho Chi Minh City to fall into a slump, in which the rental space in the central area has been significantly affected. In early 2023, the wave of returning premises has occurred frequently, appearing more on the central streets of the city. Many stores, shopping centers, and buildings continuously put up signs to transfer premises.
Currently, on some central streets of District 1 and 3 such as the Turtle Lake area, Cong Xa Paris, Hai Ba Trung, Pham Ngoc Thach, Pasteur streets, etc., people can easily see many premises with signs for rent or transfer. Not only domestic brands and stores, but also a series of foreign "big guys" have gradually left the center of District 1 such as: McDonald's, Café Saigon La Poste, PhinDeli, etc.
Ms. Linh (owner of a space for rent on Pasteur Street, District 1) said: "At the beginning of 2023, my tenant returned the space because the coffee shop business was not going well. After receiving the space back, I went through many months without any tenants. In order to have customers soon, I have reduced the price for tenants many times from 5% to 10% but still have not had any customers. If before, when I had not yet posted the space for rent, someone would have contacted to rent it first, but now, even though the sign has been up for nearly half a year, no customer has signed a contract yet."
Not only Ms. Linh's premises but also many premises around District 1 and District 3 such as Le Lai, Le Loi, Dong Khoi, Cach Mang Thang 8 streets... are still vacant. However, the rental price of these premises is still very high, ranging from 4,500 - 45,000 USD/month (equivalent to 100 million - 1 billion VND/month) depending on the area and location.
Ms. Phuong Uyen (real estate broker) said that many business owners and stores do not have enough financial resources to survive in the city center, so they are forced to leave. At the same time, they sublet the premises to get back a small amount of the deposit signed with the previous owner. The premises are located in a "golden" location, in the city center, so it is difficult to reduce the price compared to other areas. Meanwhile, the premises owner only accepts to reduce the price when customers sign a long-term contract. Now, stores are gradually moving to the outskirts such as Thu Duc City, Binh Thanh District, Go Vap District... where the rental price is cheaper, with the rental price ranging from 30-70 million VND/month.
Currently, the trend of online business with the need for only a small enough space to operate is gradually being chosen by tenants rather than having to rent a large, expensive space in the center of Ho Chi Minh City. By minimizing fixed costs, these business owners directly discount the product price to increase competitiveness. However, some landlords accept a small reduction in rent, but tenants still refuse. Perhaps, buying and then leasing real estate in beautiful locations in the center of big cities is taking a new turn.
Data from Batdongsan.com.vn shows that in the first quarter of 2023, the demand for renting townhouses in Ho Chi Minh City has decreased, especially in the city center. Accordingly, the number of customers looking to rent townhouses in District 1 decreased by 40%, in District 3 decreased by 45%, and in other non-central districts such as District 7 decreased by 52%, District 10 decreased by 48% and Phu Nhuan District decreased by 50% compared to the rental demand in the fourth quarter of 2022. Notably, in the previous fourth quarter, the demand for renting townhouses in Ho Chi Minh City's inner city also continuously decreased sharply, the decline has lasted from the second quarter of 2022 to the present and has not shown any signs of recovery.
Explaining the trend of declining demand for renting townhouses in the city center, economic experts said that the current business situation is more difficult than before, people tend to "tighten their belts" and control spending more strictly. This means that businesses must also recalculate all expenses to regulate the budget to maintain operations.
Currently, most large real estate businesses have to restructure, aggressively close ineffective and loss-making business locations or move their business to developing areas to ensure revenue and profit. Instead of trying to keep a point of sale in a central location, businesses must pay attention to the efficiency of each store, each model and choose to invest in the right area.
In addition, the cost of premises accounts for a large proportion of the total business cost, so low-priced premises are always prioritized. The wave of withdrawal from the central area is expected to continue to increase in the coming time. According to experts' forecasts, it will take at least another year to rebalance the face of the center of Ho Chi Minh City. Therefore, at this time, landlords and tenants should negotiate a reasonable price for mutual benefit.
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