Rents increase despite no tenants
According to a recent study by Batdongsan.com.vn, although many areas are currently vacant, rental prices of townhouses in Hanoi and Ho Chi Minh City in 2023 still show no signs of a sharp decrease.
In Hanoi, rental prices recorded a slight decrease in the second quarter of 2023, but increased again in the beginning of the third quarter until now. Some streets such as Ba Trieu have an average rental price of 129 million VND/month, Ly Thuong Kiet has a rental price of 80 million VND/month...
In Ho Chi Minh City, a slight decrease was recorded in the middle of the second quarter of 2023 and also started to increase again at the end of the third quarter. The average rental price on Hai Ba Trung Street was recorded at 135 million VND/month, Nguyen Thi Minh Khai was 120 million VND/month, Cach Mang Thang 8 was 85 million VND/month...
Although selling prices remained stable, rental prices showed signs of a slight increase at the end of the year.
It is worth mentioning that, according to previous records of the Journalist and Public Opinion Newspapers, many townhouses for rent on central streets of Ho Chi Minh City have been heavily affected by the wave of returning premises. Even on major streets, which used to be “golden spots” for business such as Dong Khoi, Nguyen Hue, Le Loi… more and more houses have been hanging up “for rent” signs but have not found customers for many months.
However, when looking into rental prices, many landlords still “shout” sky-high prices, up to several hundred million VND/month for not-so-large premises. Some landlords still keep the rental price of a few months before the premises were returned, while others even increase the price by a few percent compared to the previously posted rental price.
A recent report by Cushman & Wakefield also pointed out that the rental price on Dong Khoi Street is equivalent to 350 USD/m2/month. This price has increased by 17% over the same period and increased by 40% compared to before the COVID-19 pandemic. According to CBRE Vietnam, rental prices in the central area of Ho Chi Minh City still tend to increase by 1 - 1.5%/year. Notably, not only are the prices high, the current central area also faces many difficulties and problems such as difficulty in obtaining business licenses, fire prevention and fighting licenses, etc.
"Golden" premises in the center of Ho Chi Minh City have been hanging "for rent" signs for many months.
Regarding the fact that rental prices do not tend to adjust despite many difficulties, Mr. Dinh Minh Tuan - Director of Batdongsan.com.vn in the Southern region said: "The retail business sector often changes rapidly. If there is no profit for a month, they can change their business model. However, for landlords, there is no change, there is a rental price adjustment but it is small because changing the rental price will affect the selling price of their house".
Renting townhouses will become increasingly difficult.
According to Mr. Dinh Minh Tuan, the main reason for the increasing number of premises being returned on major streets in Hanoi and Ho Chi Minh City stems from the decline in business performance. In addition to high rental prices, the business efficiency of townhouses has decreased due to changes in consumer behavior and competition from shopping malls. Online shopping habits are becoming more and more popular, with an estimated 9% increase in the number of consumers shopping online in 2023 compared to last year.
The Vietnam E-commerce Report 2023 shows that the number of consumers shopping online has been growing continuously for 5 years, from 2018 to present.
Specifically, in 2018, the number of people shopping online was about 39.9 million people with a spending level of about 200 USD/person. Just 1 year later, the number of online shoppers increased to 44.8 million people with a spending level of about 225 USD/person. By 2023, this number has reached 62 million online shoppers, an increase of more than 150% compared to 2018 and the spending level also increased to 320 USD/person.
E-commerce is growing with increasing number of users and spending.
The increasing spending level of people and the coverage of e-commerce have shown that most people choose online shopping with many advantages such as low prices, diverse products, easy selection, many incentives... In addition, townhouses are also competing with the development of shopping malls and commercial complexes with cheaper rental prices and more diverse services.
For example, in the central area of District 1 (HCMC), the rental price of premises in large commercial areas is around 500 - 700 thousand VND/m2/month. Thus, tenants have to pay around 15 - 21 million VND/month for a 30m2 area. A quite affordable price when compared to the frontage of townhouses with the same area in the same area.
Especially in recent times, shopping mall owners are increasingly improving to bring the best experience to customers to increase interaction and attract customers. Business people can easily approach customers to sell services thanks to the large number of customers, and at the same time do not have to worry about procedural issues, fire prevention or most importantly, the problem of customer parking. Thereby, renting retail space in shopping malls is also more popular than expensive townhouses.
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