Once sought after in the market and considered a "golden goose" for investors, but up to now, shophouses in many apartment buildings have fallen into a state of stagnation, rented at low prices or put up for sale. This situation has caused many shophouse owners to be in trouble, investors to bury their capital because the current cheap rental price is just a grain of sand compared to the initial investment of several billion to several tens of billions of VND. This situation is happening in Ho Chi Minh City, where the population density is high, and the consumption of consumer goods of the people is at the top level in the country.
For more than 3 months, Mr. Dung - the owner of a shophouse in Go Vap district, Ho Chi Minh City, has been selling a 50m2 shophouse at a loss of more than 500 million VND, but no one has asked yet. This shophouse was bought by Mr. Dung in 2019 for nearly 3.8 billion VND, initially rented for 15 million VND/month. However, due to poor business, the tenant returned the house after 6 months of rent. After that, Mr. Dung continued to hang a sign for rent, but few people asked, so he proactively reduced it to 13 million VND/month. Up to now, after many tenants, the price has been reduced to 10 million VND/month, but the premises are still vacant.
“Every month, I still have to pay interest and principal of more than 20 million VND for a 2 billion VND loan. The rental income is meager, the pressure of interest rates is heavy, so I had to sell the shophouse at a loss, but after more than 3 months of advertising, I still haven't found a buyer,” said Mr. Dung.
In the same situation, Mr. Hien - a real estate investor shared: "In 2018, I invested in a shophouse in a project in the old District 2 (now Thu Duc City) for more than 5 billion VND, located on the main street, with heavy traffic, so at that time I was sure that over time my house would increase in price, or be rented at a high price. As planned, at first, I rented it out to customers to open a coffee shop at a price of 30 million VND/month. However, since the end of 2020, due to business difficulties, my shophouse and a series of adjacent houses in the same area have been closed, with no tenants."
“When the pandemic is over, I thought the market would quickly stabilize, but after 2 years, my apartment is still vacant. Recently, a customer wanted to rent it to open a mini supermarket and pay 15 million/month, but I did not agree, planning to sell it because the investment was not effective,” said Mr. Hien.
According to many real estate experts, in recent times, e-commerce has grown more and more, many companies now only need warehouses, not stores, and warehouses are now also smart service warehouses, online management and operation is both cheap and safe, while renting a shophouse as a warehouse is both expensive and unsafe.
According to experts, the shophouse model was really valuable when it first appeared in Vietnam in the 2000s. In the central districts of Ho Chi Minh City, a series of shophouses were once the “golden goose” that attracted investors. Because of its success, real estate businesses continuously released new supplies to the market, leading to surplus.
Mr. Le Hoang Chau - Chairman of Ho Chi Minh City Real Estate Association (HoREA) said that a shophouse project must converge many factors, especially taking into account demographic issues, calculating in detail user behavior, the number of people passing by for business and shopping activities to create daily cash flow for the project. Only then can the shophouse bring about business efficiency. In addition, it is necessary to carefully study the major changes in people's shopping and entertainment methods. Currently, consumers have used online shopping more, along with migration to satellite urban areas, making concentrated trading no longer as effective as before, thereby significantly reducing the value of the shophouse.
Sharing the same view, experts from CBRE Vietnam commented that although this is a segment that is considered by experts to be profitable, if the potential demand from the inner urban area and the surrounding residents is not carefully calculated, investing in shophouses to open stores can easily be disillusioned. In the inevitable development trend of the current real estate market, any apartment project must reserve space for commercial areas. However, depending on the location, each project will have different needs. Therefore, the development and improvement of shophouses will depend on the location and scale of the project.
In a recent market report by JLL Vietnam, this unit also gave recommendations to investors when choosing this shophouse segment, if there is no idle cash flow, investors should consider when investing in shophouse, because it will be very easy to "break out". To retain current tenants, shophouse owners must reduce rental prices. Meanwhile, with premises being offered for rent, although landlords face a request to reduce 20 - 40% of the current rental price. The contract term is still maintained at 3 - 5 years, however, tenants propose not to increase the rental price during the entire lease term...
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