HCMC rental returns down as investors dominate purchases

By Vu Le, Dat Nguyen   December 10, 2018 | 06:23 pm PT
HCMC rental returns down as investors dominate purchases
Buildings seen in downtown of Ho Chi Minh City, Vietnam. Photo by Shutterstock/Sam
More high-end apartments for rent have reduced returns on investment in HCMC, real estate professionals say.

Duong Thuy Dung, senior director at real estate market research firm CBRE Vietnam, said at a recent forum that HCMC was estimated to receive 40,000 new apartments in the 2018-2020 period, 60-70 percent of these in the high-end segment.

About 60-70 percent of the high-end segment are being bought by investors who look to rent them, she added.

Rental returns have decreased as a result, Dung said, adding that the rate in HCMC’s District 2, often the highest earners in the city, has fallen from 7.5 percent last year to 6.5-6.7 percent now.

The same is happening at Binh Thanh District, where they have dropped from 6.8 percent last year to 5.5 percent now.

A CBRE report notes that real estate purchases for occupation have decreased this year. Instead, investors account for 61 percent of buyers in the high-end segment, higher than last year’s 50 percent. The number of occupiers, meanwhile, was just 26 percent, against last year’s 35 percent.

The CBRE findings have been confirmed by another report by real estate market research firm Savills Vietnam. It said that from 2013-2017, over 70 percent of high-end residence buyers in Hanoi were investors. The figure is 65 percent in HCMC.

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