Downtown HCM City townhouse rental costs continue to drop

Prices have fallen by more than 30% as a result of several city center firms being forced to close owing to poor company operations, leaving landlords with little alternative but to accept reduced rents in order to retain tenants.

Property owner Nguyen Thai Phong told Vietnam News that he had to lower the rent for his spa salon space from roughly VND100 million per month to VND65 million per month. He is located on Nguyen Trai Street in District 1.

He asserted that in trying circumstances, both landlords and renters must engage in negotiation or both sides will suffer.

Many of the streets in the downtown region, including Ly Tu Trong, Hai Ba Trung, Truong Dinh, and Nguyen Trai streets, which were formerly crowded with establishments like hair salons and clothing stores, are now empty.

Due to the difficult economic climate, demand for rental homes in the country's largest city's core region has declined by 6%.

In the city's core streets, rental rates for townhouses have decreased by an average of 8% annually since 2019, according to a study by the real estate company Savills.

According to the report, the total leased space in the city center has decreased to its lowest level since the fourth quarter of 2022.

Real estate experts have ascribed the slowing economy's development and a shift in customer behavior toward online purchases to the sluggish commercial property leasing market.

As a result, landlords are now required to provide price discounts of 20% to 30% to entice renters.

Independent real estate analyst Le Quoc Kien forecasted that by the second quarter of 2020, rental prices will only be at 80% of 2019 levels.

Future investors should be aware of the rental rates in the region and make plans appropriately, he advised.

Tenants are now in a position to negotiate much cheaper rental rates due to an excess of available houses and a decline in demand.

The arrangement has given tenants additional alternatives, but also presents difficulties for landlords who are having trouble renting out their buildings.

In District 7, Nguyen Viet Tuc, a real estate dealer, said over the phone to Vietnam News: "The future of the rental market in downtown HCM City remains uncertain."

Townhouse rental rates in the city's core sections fell, which was a reflection of the pandemic's overall effects on the housing market.

"It is uncertain when or if rental prices will bounce back to pre-pandemic levels as businesses continue to struggle and consumer behavior continues to evolve," he said.

He said that in the interim, both landlords and tenants must adjust to the existing situation and cooperate to create win-win solutions.

In order to entice renters, landlords would want to think about providing more flexible lease terms or extra facilities, while tenants must be honest about their financial limitations, he continued.

According to experts, both landlords and tenants should make it through these difficult times and succeed in the dynamic real estate market.

Source: VNS