Land prices fluctuate
Recently, the market for renting business premises in Ho Chi Minh City has had many fluctuations. In central areas such as District 1, District 3... there has been a situation of returning business premises. Many areas are covered with phone numbers. However, the rental price has not decreased but remains high.
According to data from the Proptech Vietnam Network platform (Proptech Nha Tot), rental prices in central areas of District 1 (HCMC) have fluctuated up and down from the beginning of the year to now.
In the central area of Ho Chi Minh City, rental space is currently very expensive.
For example, on routes such as Dong Du (District 1), Proptech Nha Tot surveyed the monthly rental price at some points on this route at 230 million VND in August and the average of the route was about 200 million VND in the second quarter of 2024. At the beginning of the year in January and February, the above route only recorded a rental price of about 180 million VND/month.
One of the other routes such as Dong Khoi (District 1) has an average reference price of 250 million - 270 million VND (highest in July 2024), then in August 2024, the price decreased to 250 million VND/month.
The rental space is vacant when the customer returns.
Ly Tu Trong Street in the first quarter of 2024, the rental price is from 180 - 200 million VND/month. In the second quarter of 2024, it increased to 220 - 240 million VND/month, but in the third quarter of 2024, it decreased to 190 and 180 million VND/month.
The rental price on Le Duan Street (District 1) is the most stable street, fluctuating from the beginning of the year until now at around 276 - 300 million VND/month.
In addition, Proptech Nha Tot's data shows that rental prices on Pasteur and Thai Van Lung streets (District 1) have increased slightly in recent times, reaching 260 million in August.
Savills Vietnam Co., Ltd.'s Q3/2024 Market Research Overview Report shows that the current rental market in Ho Chi Minh City has many positive changes, rental prices remain stable and supply is still guaranteed. However, prices often fluctuate depending on the period, area and business form.
Many premises are vacant but rental prices are still "sky high"
According to Nguoi Dua Tin , the price of premises in the central area of Ho Chi Minh City has fluctuated a lot since the beginning of the year. However, the rental price has not differed too much.
In particular, the situation of returning premises is happening on many routes, however, through brokerage channels, rental prices in vacant areas are still high.
Field survey at Ly Tu Trong Street (District 1, Ho Chi Minh City) intersection with Truong Dinh Street. This premises was previously rented for food and beverage business, but is currently vacant. Rental phone numbers are densely posted in front of this premises.
Contacting via phone, the reporter was told by a broker named Huy that the 3-storey space, about 1,000 square meters, was for rent at about 35,000 USD/month (more than 800 million VND). When the reporter mentioned the long-term lease of 3-5 years and asked for a rent reduction, this person said the final price would not be reduced.
The space for rent in District 1 is vacant and is being offered by brokers for more than 35,000 USD/month.
Also at the above premises, the reporter contacted another broker's phone number and was quoted a price of more than 34,000 USD/month and signed a contract with the owner. However, it had to go through a broker, because this person said he had worked with the landlord.
Sharing with Nguoi Dua Tin about the current premises market, Mr. Nguyen Hong Hai, Chairman of VNO Investment and Development Joint Stock Company (VNO Group) commented: "Since the beginning of 2024, the premises rental market has been recorded through many information channels showing that prices are quite low and the vacancy rate on the routes is also gradually increasing. The occupancy rate and liquidity for this segment will only gradually increase again after the second quarter of 2024".
According to Mr. Hai, the rental market for premises in the center of Ho Chi Minh City was previously rented by many fashion brands and private enterprises to do business in many forms...
However, the economic downturn has tightened spending, coupled with high operating costs forcing many to give up their premises and change their business direction. This has caused some stores to close and create vacant premises.
A road right in the center of District 1, Ho Chi Minh City.
"Although vacant, I have observed that the rental price has not decreased, or in some places it has decreased but not significantly. Landlords always have the mentality of keeping the rental price high. They only reduce it when they commit to a long-term lease or pay a deposit for many months. Meanwhile, current tenants are also facing financial difficulties, when both sides cannot find a voice, it is normal to stop cooperation. Meanwhile, to find customers with enough potential to continue to rent premises for hundreds of millions of VND/month, it will take a long time," Mr. Hai commented.
Sharing the same perspective, speaking with Nguoi Dua Tin , Mr. Le Mai Tai, CEO of CRE Group Real Estate Development Company Limited, commented: "The rental price of premises in the central area of Ho Chi Minh City or neighboring areas depends almost entirely on the value of real estate. In the central area such as District 1, the value of real estate is high. The owners are also those with full economic conditions. Therefore, even though the rental market fluctuates a lot, the rental price will not decrease too much."
"We can see that the price of premises in the central district is always at a "huge" level. Although many premises are returned, the price is not reduced because the owners do not want to create a wave of price reduction. This will cause the rental price of the whole area to decrease and the real estate value of the area will go down. Therefore, they are willing to accept leaving the premises empty," said Mr. Tai.
"Currently, most of the customers returning the premises are businesses affected by the restructuring of the industry. Industries such as pure retail will find it very difficult to compete with the current e-commerce model, so the trend of returning the premises of business owners is inevitable. Meanwhile, food businesses and investment models that attract young people are still operating and the demand for premises is still very high," said the CEO of CRE Group Real Estate Development Company Limited.
Some areas also have very high prices for whole house rentals.
According to some brokers, in recent years, there have been very few transactions on the central streets of District 1. Real estate owners here mainly use them for renting and storing assets.
The above area is fully exploited for rental space. Landlords often have the mentality of maintaining stable rental prices to maintain the true value of the property. This is the reason why rental prices are difficult to fluctuate strongly.
Office space for lease has limited supply
Regarding rental real estate, the market research overview report for the third quarter of 2024 by Savills Vietnam Co., Ltd. shows that in the third quarter of 2024, newly-joined Grade A projects saw a modest increase of 1% quarter-on-quarter in total supply, reaching 2.8 million square meters of net leasable area (NLA) from 392 projects, up 7% year-on-year.
Growth was mainly driven by six new Grade B and C projects, adding 39,800 sqm NLA. Grade B had two new projects, Thaisquare The Merit (District 1) and CMC Tower B (District 7), accounting for 60% of the new supply. Four smaller Grade C projects, each with an area of 3,000 to 5,000 sqm NLA, were mainly located in the non-CBD area. Notably, Binh Chanh welcomed its first office building, LN Hub Building, adding over 3,300 sqm NLA.
According to Savills Vietnam, reasonable rental prices are currently favored by many customers. Specifically, Grade A projects in District 2 and District 7 performed well in the quarter, with occupancy increasing 5 percentage points quarter-on-quarter and 23 percentage points year-on-year to 89%.
Average rents remained stable QoQ but increased 6% YoY to VND812,000/m2/month, reflecting a balance between supply and demand. Non-CBD Grade A rents increased 1% QoQ, while CBD Grade A rents decreased 1%.
According to Savills’ survey of leasing transactions in Q3/2024, the majority (73%) of transactions were aimed at relocating to better quality buildings. The Finance, Banking, Insurance and Real Estate (FIRE) sector led with 39% of transactions, followed by ICT with 31% and manufacturing with 13%. A large proportion (75%) of tenants were foreign companies, mainly from the US, Korea and Japan, while domestic companies accounted for only 25%.
Source: https://www.nguoiduatin.vn/thi-truong-bien-dong-vi-sao-mat-bang-cho-thue-trung-tam-tphcm-luon-neo-gia-khung-20424100413324823.htm
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