People often think about large commercial centers and serviced apartments managed by foreign companies when it comes to the realty rental segment. However, individual owners have begun joining this market segment.
Huynh Kim Doan, director of Eden Real, is mulling promoting the service of leasing apartments owned by individuals in Vietnam after her trip to Singapore. A three-bedroom unit whose rent is only one-third of a hotel room rate is very suitable for companies that want to save money when arranging multi-day trips for their employees and customers.
Her idea is supported by many individual investors who own apartments in several projects in HCMC since those owners have found it hard to rent their homes on their own. Moreover, these investors have been unable to sell their apartments, so leasing them is a way out in the current tough market conditions.
High-income people choose hotels or luxury serviced apartments during their business trips, while a majority of companies look for affordable accommodations to cut costs. Therefore, these budget-conscious businesses are target tenants of apartments owned by individuals, said Doan.
The rent for an apartment of 2-3 bedrooms is around VND1 million per day, inclusive of power, water and sanitation services costs.
Doan said her company had had some 70 units available for lease, including high-end apartments in districts 1, 2 and 3, villas in Tan Binh District and mid-end condos in Nha Be District. Initially, the company targeted about 100 units, but later raised the number to 200 to meet the needs of tenants and house owners.
Unlike apartment sales that are tough at the moment, leasing services guarantee stable revenues for management companies that enjoy 3-5% of the monthly rent.
Doan said her company was introducing this type of service to a number of domestic and foreign companies, and they had shown interest.
Market observers said the fact that multiple commercial apartments have been put up for rent had piled pressure on the home rental market, leading to an increased competition for tenants.
Cushman & Wakefield’s research shows HCMC currently has around 3,300 serviced apartments, half of them in the central business districts, and most of them managed by foreign companies such as Sedona, the Ascott, IHG and Norfolk Group.
However, supply in this segment will be bigger than in the still-dormant commercial apartment segment. As a result, many investors are looking to lease out their apartments.
The average monthly rent for a grade-A apartment is VND637,000 (US$31) per square meter, and the rate for a grade-B one is some VND470,000 (US$23) a square meter.
Cushman & Wakefield forecast serviced apartments and apartments for rent would continue to compete in rents, which would send rents down this year.
While focusing on the major projects, CB Richard Ellis Vietnam (CBRE) will engage in the townhouse segment as it sees the demand for business premises rising.
Laszlo Fulop, associate director of retail services at CBRE, said his firm would focus on the commercial streets this year. Instead of waiting for supplies from large-scale commercial centers, local and foreign retailers are looking for spaces for short-term rent.
“We’ve found that customers still eye street-front shops even when they can rent retail spaces in commercial centers,” Fulop said, adding there are many reasons for this trend, such as easy access, lower rent and above all, a wide range of choices.
Prime sites at the corners of two-way or busy streets like Le Loi, Nguyen Hue, Dong Khoi and Nguyen Duc Canh are always targeted by food chains such as Domino’s, Burger King, KFC, Lotteria, Tous Les Jours, Coffee Bean & Tea Leaf, Texas Chicken, Popeye and Pizza Hut, he said.
According to CBRE, when renting a street-front shop, tenants usually spend some money upgrading the house and this sum is deducted from the rent. CBRE has a department specializing in supporting tenants during construction and installation.
Fulop said customers should look for opportunities in infrastructure development projects in the future, such as metro lines, road interchanges, key residential areas, offices and educational centers.
The development of metro lines will drastically change the picture of the retail market in HCMC in terms of shopping habits and retail areas. The higher number of pedestrians will offer more chances for certain commercial streets.
The Saigon Times Daily