Information regarding the auction for the lease of the Thuy Ta restaurant land in Da Lat City, with a rental price of 15.1 billion VND per year, is attracting attention. According to regulations, the winning bidder must pay a lump sum for the 10-year lease term, totaling 151.5 billion VND. This means the daily rental price for this land is approximately 41.6 million VND per day.
On real estate-related online groups, most people agree that this rental price is very high compared to prices in Da Lat in particular and the country in general, especially during this economic downturn.
Speaking to a reporter from Dan Tri newspaper, Mr. HB - who has many years of experience in real estate investment in Da Lat - said: "In the past, before Da Lat was industrialized, the location of Thuy Ta restaurant could be considered one of the most prime locations in the city center."
Thuy Ta Restaurant (painted white) in the center of Da Lat city, Xuan Huong Lake area (Photo: dalat.vn).
However, according to HB, Da Lat is now covered with many shops and restaurants of various sizes, so Thuy Ta doesn't attract as much attention as before.
Mr. HB added that he is originally from Da Lat and usually only visits this restaurant about 2 or 3 times, the first time to "check it out," and the second and third times to bring friends and relatives. Furthermore, for his daily dining needs, Thuy Ta is not the optimal choice.
Furthermore, according to HB, on weekdays, getting around the restaurant area is quite convenient. However, during holidays and festivals, this is the busiest area in the city, making travel quite difficult due to frequent traffic jams.
Commenting on the rental price of 41.6 million VND/day, Mr. HB believes that if the restaurant were renovated, upgraded, and additional floors built to increase customer volume, this figure could be feasible. However, according to regulations, the winning bidder must maintain the current state and is not allowed to add any structures, making breaking even impossible.
According to calculations, the covered structure in the auction area has an area of 383m2, thus accommodating approximately 250 guests (1.6m2 per guest). If the maximum number of guests is accommodated, on average each guest would need to spend about 170,000 VND on food and drinks for the revenue to be just enough to cover the rent, not including staff costs, electricity, water, and input materials.
Furthermore, as someone who has lived in Da Lat for many years, Mr. HB believes that the location of Thuy Ta restaurant is only suitable for F&B business, not for other fields.
Ms. Nguyen Thi Thu Trang, director of a real estate consulting company, commented that Thuy Ta restaurant has a prime location in the heart of Da Lat. "In real estate, the first choice is always location, and Thuy Ta has this," she said.
A Hanoi tycoon won the bid to lease land for the Thuy Ta restaurant at a price of 15.1 billion VND/year (Photo: Dalat Tourist).
However, the annual rent of 15.1 billion VND will raise questions for most people.
According to Ms. Trang, from a financial perspective, paying 151 billion VND in advance for 10 years of rent would result in a higher actual rental price for the area than 151 billion VND. If that 151 billion VND were deposited in a bank savings account, after 10 years, the profit would still reach hundreds of billions of VND (calculated at an interest rate of approximately 6 to 7% per year).
Ms. Trang stated that the real estate market is currently at its "lowest point." Many landowners are having to cut their losses significantly, even for properties in prime locations. Therefore, she questioned whether the wealthy Hanoi-born investor would forfeit his deposit in this auction. If so, what price would the next tenant pay? She believes the answer will only become clear once the rental income is fully paid into the state budget.
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