HCMC apartment rent revenues plummet amidst Covid-19 pandemic

For almost two months, Ha has been losing VND40 million ($1,700) a day from the 30 serviced apartments she rents out in HCMC. This month, she has no tenant despite lowering prices to half or a third of the price tag before the novel coronavirus epidemic hit.

Last year, her apartments were almost always fully occupied by a variety of Vietnamese and foreign tenants, but the situation began to change towards the end of January when Vietnam started recording its first coronavirus infections.

"I am helpless. All I can do is to be patient and wait for the pandemic to pass," she said.

Quan, landlord of a 10-aparment complex in Thu Duc District, has seen his revenues go down 80 percent as his tenants, mostly blue-collar workers, left the city for their hometowns after their jobs got cut.

The remaining tenants are asking him for discounts, even though he himself is struggling to repay the long-term loans (until 2025) he has taken to invest in the complex.

The Covid-19 pandemic has hurt Vietnam’s apartment industry sector as tenants’ income drop or they lose their jobs.

About 10 percent of businesses have had to scale down their production in February due to coronavirus impacts, and the figure rose to 15 percent by the second week of March, according to a recent report by the Ministry of Labor, Invalids and Social Affairs.

In the worst case scenario, it is estimated that between 880,000 and 1.3 million people will lose their jobs or have their working hours reduced, it added.

Nguyen Loc Hanh, CEO of HCMC-based real estate firm Ngoc Chau A, estimated that rent revenues are falling by an average of 50 percent in the market, and the figure could go up to 70-80 percent if the pandemic persists.

Landlords who have borrowed money to invest in apartments will be hurt the most as cash flow drops, and the best solutions for them is to accept discount proposals by tenants to avoid zero revenue, he said.

"It’s better to lose some than to lose all," he said, adding that market demand will return to normal when the disease is contained.

Meanwhile, both landlords and tenants are struggling. Lan, who has three apartments for rent in HCMC’s District 9, has not found new tenants for two since December.

The remaining apartment is rented by a family of five in which the husband, who works in the construction sector, has been unemployed for months.

"I’ve given them a 20 percent discount, but even with that they ask to pay the rent in three installments each month because their income is limited."