HCM City rental market continues slump

For example, the owner of a luxury apartment in District 1 is renting a unit for VND24 million (US$1,054) per month, but he bought it for VND4 billion. To attract tenants, the owner, Hung, has furnished it for VND300 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.

Tran Thi Thuy is also renting an apartment in Chu Van An residential building in Binh Thanh district.

To lower rental costs, Thuy chose not to furnish the apartment and set the price at VND7 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. 

Tuan, for example, has had problems renting his three-storey house located on Truong Quoc Dung and Nguyen Van Troi streets in Phu Nhuan district. He has lowered the rent to VND50 million per month from VND80 million.

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

According to property website batdongsan.com.vn, rental prices for apartments in districts 2, 7, 9 and Binh Thanh have also declined.

For example, in Binh Thanh district, monthly rent in Vinhomes Central Park, Saigon Pearl, Riverside, and Saigonland apartment buildings has been lowered by VND2 million - VND5 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 Phu Hoang Anh, Hung Phat, Hoang Anh Gia Lai and Era Town, a 60-70 sq.m apartment rents for VND7 million - VND10 million per month, compared to VND12 million -VND15 million last year.

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

Nguyen Huy Vu, head of BANVIETLAND Corporation, told Dau Tu 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.

Vu Van Sang, a private homeowner who rents three apartments in Phu Nhuan and Thu Duc 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.

Le Hoang Chau, 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,” Chau said.