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HCMC’s street houses for lease sees low demand despite rental cuts
By Dao Loan
Monday,  Apr 19, 2021,10:25 (GMT+7)

HCMC’s street houses for lease sees low demand despite rental cuts

By Dao Loan

A street house with a “For lease” sign in downtown HCMC. Retail spaces at street houses for lease in HCMC saw a limited number of customers although the owners have slashed rentals sharply – PHOTO: DAO LOAN

HCMC – Over one year since the Covid-19 pandemic hit Vietnam, retail spaces at street houses for lease in HCMC still see a limited number of customers although the owners have slashed rentals sharply.

Nguyen Van My, owner of a 100-square-meter house in a six-meter-wide alley on Nguyen Tri Phuong Street, District 10, said that his house has been vacant for two months as his previous customer returned the premises. Earlier, he had leased the house to a Malaysian seafood export company on a long-term basis for a monthly rate of VND22 million, but the company returned the property in February this year to find a cheaper one.

My then cut down the monthly rental to VND16 million and offered the property for lease on many real estate platforms but saw no customers.

Truong Thanh, owner of a street house in District 7’s Phu My Hung, said that it was difficult to find customers during the pandemic. Last year, after several months, the local economy felt the impact of the virus and his customer decided to stop renting the house.

Until the beginning of this year, after dealing with tens of real estate brokers, Thanh managed to find an appropriate customer, a commerce company. However, he had to reduce the rental by nearly 30% and pay the brokerage fees, which were equivalent to one month’s rent.

Vo Thi Khanh Trang, head of the Research Department of Savills Vietnam in HCMC, told the Saigon Times that many lessees have returned retail spaces at street houses, including those in downtown HCMC, due to the impact of the pandemic. The rentals were also cut sharply.

While the operation of shopping malls remains stable, that of retail spaces and street houses is tough, with the number of street houses for lease being on the rise.

The occupancy of retail spaces in shopping malls in the city fell slightly in the first quarter but still reached 93%, and the rentals remained stable at some US$50 per square meter per month, she added.

According to the Savills representative, the market entry plans of foreign lessees are progressing slowly due to Covid-19, although they consider Vietnam as one of the potential investment destinations.

She added that street houses located at street corners in inner-city areas still remain attractive to customers. These locations and those near hotels as well as premium office buildings are forecast to see a rising number of lessees in the upcoming time. Potential lessees could be operators of mid-end and high-end brands.

Further, street house owners should be flexible in meeting new demands from customers. For instance, amid the pandemic, lessees want to rent parts of a house to cut operational costs, while the owner wants to lease the entire house, leading to an imbalance between demand and supply, Trang said.

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