Saigon landlords slash commercial rent over demand slump

By Trung Tin   March 15, 2020 | 03:16 am PT
Saigon landlords slash commercial rent over demand slump
A townhouse hanging a sign looking for new tenants in Ho Chi Minh City. Photo by VnExpress/Quynh Tran.
Saigon landlords are cutting short-term rents for businesses by up to 50 percent as demand becomes sluggish during the Covid-19 epidemic.

Several landlords leasing out town houses to restaurants are foregoing up to one month of rent to keep their tenants, while those leasing space to convenience stores are discounting short-term rents by between 30 and 50 percent, says a report by real estate consultant Savills.

Landlords in famous culinary neighborhoods like Phan Xich Long street in Phu Nhuan District, or Ho Tung Mau and Ngo Duc Khe streets in downtown District 1 have also lowered rents by 10-20 percent compared to last year.

They are also offering more flexibility, letting tenants rent a desired area instead of requiring that the premises as a whole be leased, as they were doing earlier, the report says.

The novel coronavirus (Covid-19) epidemic has been a key reason behind these changes. The epidemic has kept customers away and made it very difficult for businesses in the F&B and retail sectors.

Many have been forced to reconsider their business strategies. While some renewed their leases or tried to renegotiate rents down in order to keep favorable locations, many have decided to end their tenancy altogether.

Long standard leases in areas outside District 1, in some cases for up to 10 years, were also a reason many prospective commercial tenants were hesitant to enter new contracts, the consultancy added.

Businesses in the food and beverages sector have been particularly hard hit. For them, the Covid-19 epidemic has been a double whammy alongside a government decree that came into force at the beginning of the year, doubling drink-driving fines.

Some businesses in the sector have reported that their February income has fallen by half over the previous month, Savills said.

As a result, major commercial landlords such as mall operator Vincom Retail and real estate developer Hung Thinh have also began to offer more favorable payment terms to commercial tenants, including rent discounts of 20-40 percent depending on the extent to which these business have been adversely affected by Covid-19, Savills said.

The epidemic is also expected to accelerate the consumer shift to online shopping from personally visiting brick-and-mortar stores at both malls and townhouses, a phenomenon that was already happening in the retail market, she added.

The novel coronavirus has left many restaurants, popular food streets and street eateries deserted for the most part, serving only a few customers even during peak hours. Many owners have been forced to lay off staff to reduce costs.

Vietnam had recorded 53 Covid-19 infections as of Sunday evening.

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