Although the wave of returning premises is increasing, the rental price still does not decrease, what is the reason?
From the end of 2024 until now, along major, busy streets in the center of Ho Chi Minh City such as Nguyen Hue, Le Loi (District 1), Vo Van Tan, Hai Ba Trung (District 1, District 3), Phan Xich Long (Phu Nhuan District), Nguyen Trai (District 5), Ba Thang Hai (District 10) ..., more and more rental premises have been closed even though it is in the busiest business season of the year. The leading cause is due to the rental price being too high.
Empty space, rent still increases
According to some leasing brokers in Ho Chi Minh City, the situation of shops and restaurants is sluggish, everyone can see it, but paradoxically, the rental price has not decreased. Most landlords have announced a 10%-15% increase in rental price from the beginning of 2025. No matter how much business people beg or negotiate, the landlords only "reduce the bonus" by a few million VND or a few percent for 1-2 months, while the actual rent is much higher than before.
Mr. Thai Tran, manager of a men's and women's fashion store on Nguyen Trai Street, said he wanted to transfer his 80 m2 store, with 4 years left on the lease and a 60 million VND/month rent, with a 3-month deposit. The reason was that he "had no luck with the landlord" and he planned to switch to another type of business. However, when we asked, Mr. Thai Tran told us that because business was not going well, he had negotiated many times to reduce the rent, but the landlord did not agree, and even said that it would increase by 5% from 2025.
A space on 3/2 Street, District 10, Ho Chi Minh City has been vacant for a long time. Photo: LE TINH
Data from Batdongsan.com shows that in the first 9 months of 2024, the rental price of townhouses in Districts 1, 3, 10, Thu Duc City (formerly District 2) and Binh Thanh District increased by 10% -30%. Notably, the rental price on Nguyen Trai Street increased by more than 100% compared to the same period last year, causing many stores to return their premises. Currently, this street is full of for rent signs, with broker phone numbers plastered all over the facade, creating a messy scene.
Not only in Ho Chi Minh City, in Hanoi , many fashion streets in the center such as Kim Ma, Thai Ha, Chua Boc, Pham Ngoc Thach... shops have also closed in series. Street-front houses for rent with prices ranging from tens of millions to hundreds of millions of VND/month are now empty waiting for tenants. Ms. Nguyen Thi Lan, who has a 3-storey shop for rent on Kim Ma Street (Ba Dinh District), said that the premises have been empty for 3 months now, if there are customers, they can rent for more than 100 million VND/month. According to Ms. Lan, many brands and shops on this street are continuously closing and leaving. The main reason is that business is slow, so they switch to online sales, not necessarily because the premises are too expensive.
According to data from Batdongsan.com.vn, the level of interest in townhouses for rent in Hanoi and Ho Chi Minh City decreased in the fourth quarter. Meanwhile, the rental price of townhouses in Hanoi and Ho Chi Minh City has been on a continuous upward trend since 2023. For example, in Hanoi, in the first quarter of 2023, the rental price was only 65 million VND/townhouse/month, but by the fourth quarter it had increased to 70 million VND/month; while in Ho Chi Minh City, it also increased from 65 million VND/month to 80 million VND/month.
Difficult to find common ground!
Mr. Le Dinh Chung, General Director of SGO Homes Real Estate Consulting and Development Joint Stock Company (Hanoi), confirmed that street-front houses for rent are in a sluggish state, only main streets and good locations attract some brands and industries to rent. "The general market is gloomy, the reason is that online shopping is developing strongly, so businesses and sellers do not need street frontage to display many products" - Mr. Chung said.
Moreover, maintaining offline business premises is costly, so tenants are very careful to ensure business efficiency. Not to mention, the market is gloomy, prices are still increasing.
Mr. Chung explained that the increase in rental prices for street-front houses is due to the increase in real estate prices in general and street-front houses in particular in 2024 with an estimated figure of 30% -50% compared to 2023. For example, if the price of a street-front house in 2023 is 20 billion VND, now it has increased to 30 billion VND, so the lessor also expects the rental price to increase to achieve the desired profit level.
Mr. Nguyen Tat Thinh, founder of the technology real estate platform HouseZy.vn, said that the situation of unsold premises in Ho Chi Minh City has been going on for many years, most strongly after the COVID-19 pandemic due to the rise of online business, consumer consumption and shopping habits have also changed dramatically, leading to previously "hot" routes becoming unsold. Along with that, landlords increase rents according to the added value of the premises, regardless of the stores, especially chains, having a strategy to reduce costs, leading to the situation of unsold premises. "The owners of beautiful premises in central districts 1, 3, 5... are all financially well-off people, so they keep increasing prices. They also know clearly who the tenants are. They rent not only for business but also for branding, typically the Han Thuyen premises (District 1) returned by Starbucks Coffee in mid-2024, there are many famous brands wanting to rent even though the price has increased by nearly ten thousand USD compared to before. With such valuable premises, the landlord only agrees with those who accept the price they offer, never lowering the price" - Mr. Thinh said.
In addition, the owners of these premises also calculate very carefully, if they do not rent to the right people, the value of the premises will decrease, if they rent to people without enough potential, the business will be unstable and very risky.
Mr. Phan Dinh Phuc, CEO of Seenee (a unit specializing in reviewing real estate projects and products), said that many landlords still increase rental prices because they compare rental profits with bank interest rates, which are currently lower. They also consider their rental prices compared to similar premises to avoid reducing the value of the property. In addition, because they believe in the possibility of market recovery, landlords are willing to wait for suitable tenants instead of reducing prices, which can affect the rental prices of the whole area. "In central districts such as districts 1, 3, 5, 10, many landlords have good financial potential and often join forces to maintain the general price level. They are concerned that if one place reduces prices, the whole area will be affected, making it difficult for rental prices and property values to increase. Meanwhile, tenants want beautiful premises at reasonable prices, leading to a situation where agreements are not reached, premises are vacant for a long time but rental prices still increase" - Mr. Phuc analyzed.
Experts predict that in the next 2-3 years, the situation of vacant premises in Hanoi and Ho Chi Minh City, especially in central districts, will increase due to economic difficulties and the shift in consumer behavior to online shopping and e-commerce.
To overcome this, landlords need to adjust rental prices to match the market, keep prices stable for 3-5 years and support initial rental price reductions to encourage tenants. On the tenant side, it is also necessary to prepare a clear business plan to build trust with landlords, even consider sharing premises with other units to reduce costs and risks in the early stages.
Mr. Le Dinh Chung said that in the current context, the only way left is for landlords and tenants to proactively discuss and share difficulties with each other to find the best solution.
According to Mr. Le Dinh Chung, the booming shopping mall model has also affected the rental activities in townhouses. "The trend in developed countries is still to do business mainly in shopping malls, not selling on the streets," Mr. Chung commented.
Source: https://nld.com.vn/ly-giai-da-tang-gia-cua-mat-bang-cho-thue-196250106205409965.htm
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