HCMC business premises rents continue downward spiral

A VnExpress survey found that many HCMC’s houses whose rents had fallen by 40-50 percent in 2020 saw these fall further this May and June, with tenants asking the landlords for reductions because their businesses had been suffering because of the fourth Covid-19 wave.

The rents of houses on Ky Dong Street in District 3 fell by half over last month. The landlords agreed to reduce house rents to support the tenants whose businesses have been suspended since May 31 when the city launched a social distancing campaign.

Nguyen, who rents a house to his run business at the Hang Xanh intersection in Binh Thanh District, said his landlord lowered the rent by 20 percent in May and 30 percent in June. House rent for July will be renegotiated depending on the Covid-19 situation, he added.

Landlords who own houses in the central area of District 1, including Huynh Thuc Khang, Ho Tung Mau, and Dong Khoi streets have also reduced rents by 20-30 percent starting June.

Meanwhile, many owners of downtown houses in District 1, 3, 5, Binh Thanh and Phu Nhuan Districts have been unable to find tenants despite having cut their rent by 20-30 percent.

Mall operators in Binh Thanh district have supported restaurants that rent spaces in shopping malls by reducing their rent by 50 percent starting May until the pandemic is under control. Previously, Binh Thanh District’s mall operators had cut rents by up to 70 percent during previous outbreaks.

Real estate trading site Batdongsan.com.vn has reported that demand for rental homes dropped by 11-18 percent in April over March, while demand for kiosks fell 25 percent.

Trang Minh Ha, chairman of North Star Asia, a company providing human resources training courses and business consulting services, told VnExpress that the average rent cuts in HCMC during May and June was 20-30 percent, with 50 percent the highest cut recorded.

"Houses that are rented out for running businesses have been unable to find tenants due to the previous outbreaks, and are now suffering more from the fourth outbreak," he said.

He expected that the house rents crisis could prolong further, adding that some landlords have refused to lower the rents because they are afraid that their properties will lose value.

He said that cutting down the rent by half, or not collecting rents during the social distancing period was more beneficial for the landlords than leaving the property vacant for a long time.

"Both landlords and leasers should negotiate and support each other to overcome the hardships amid the pandemic, which will reduce losses on both sides," said Ha.

HCMC, home to 13 million people, has so far recorded 1,527 local Covid-19 infections in Vietnam's latest coronavirus wave since late April, having the second-highest number of infections.