According to expert Savills, the townhouse rental market in Ho Chi Minh City is facing an unprecedented challenge, with rental prices continuously decreasing despite being located in a busy central location.
Experiencing three COVID-19 outbreaks, the retail real estate segment in Ho Chi Minh City continues to have positive signs of recovery and growth, reflected in the occupancy rate, new supply, as well as the fact that many companies International retail continues to expand operations.
Records from the market show that retail brands operating in the fields of catering, convenience stores, and essential industries still have expansion plans. Rents gradually recovered, especially in central locations.
However, before the 4th outbreak of the COVID-19 epidemic, some leased premises, even with construction walls, accepted to suffer losses and proceed to return the premises due to changes in the strategies of retailers to adapt to the pandemic and boost sales through e-commerce, as noted by Savills.
The occupancy rate of the retail real estate segment grew slowly. Except for corner townhouses on high-traffic streets, rentals are better, but in other areas, even busy premises such as Ho Tung Mau, Huynh Thuc Khang, Dong Khoi (District 1), The occupancy rate is also affected a lot.
According to Savills, the gap between supply and demand is increasing according to the complicated developments of the pandemic situation. The majority of townhouse owners agreed to cooperate and negotiate to support a 20-40% reduction in the social distancing period according to directives 15 and 16 in order to keep the lease.
Ms. Vo Thi Khanh Trang, Director of Research, Savills HCMC, said: “The market is shifting towards tenants leading the market, while landlords are gradually decreasing their optimism and have begun to take over the negotiations so that they can rent the premises. Rents continue to plunge”.
“In order to retain existing tenants, landlords must reduce rents. While with premises on offer, landlords face demands for a reduction of 20% to 40% of the current asking price. The term of the contract. VND still remains at 3 to 5 years, however, tenants propose not to increase the rent during the lease term,” said Ms. Trang.
In addition, some landlords said that if the distance is too long and the rent reduction is not agreed by the two parties, the landlord has also thought of a solution to find new tenants and give priority to office tenants, corporate headquarters because this group of customers is less affected than the retail industry.
Ms. Trang added that, in terms of the general retail and commercial rental market in Ho Chi Minh City, the premises in the central area will still be more sought after than in the non-CBD areas.
According to Savills updated modern retail market data in the first quarter of 2021, the vacancy rate in the central area increased by 3%, while the vacancy rate in the non-CBD area tends to increase to 7%.
In the short term, the townhouse rental market may continue to face paying or reducing rent to cut costs from existing tenants and difficulties in finding new tenants.
Landlords will no longer have the upper hand, instead, tenants will take advantage with more options to keep up with changing consumer behavior trends.
In the long term, the retail space market in general and the townhouse rental market in particular are expected to have many positive signals.
Source: vietnambiz.vn – Translated by fintel.vn