Hanoi shophouses struggle to attract tenants

Son bought a three-story shophouse with an area of more than 150 square meters in Duong Noi urban area, Ha Dong District, in late 2021 at a cost of VND23 billion (US$974,000).

He sought a monthly rent of VND20 million for it, or a yield of jut 1%, but has rarely found takers.

For more than a year now he has also been trying in vain to sell it at a discount of 20%.

Every month Son he has to pay interest and principal totaling nearly VND200 million on a VND10-billion bank loan he got to buy the place.

Ha paid VND17 billion, partly from a bank loan, to buy a four-story shophouse with an area of 70 sq. m in an urban area in the east of Hanoi in early 2022, hoping to resell it for a profit.

But then the market froze, and he has been unable to sell it. He has been seeking to lease it for VND30 million a month, but has not managed to find a tenant.

Saddled with large loan repayments, he has offered to sell at a loss of 30%, but has found no takers.

Hundreds of shophouses in the city’s urban area have remain vacant, and some are on sale at below cost.

On To Huu Street, hundreds of shophouses at a project in the Van Phuc area in Ha Dong District, which had been bought for VND20-26 billion, remain unoccupied with their owners desperately looking for tenants.

A 90-sq-m shophouse with a street front often fetches a rent of VND30-40 million.

On Nguyen Van Huyen Street in Cau Giay District, one of the most expensive areas to the west of West Lake, dozens of low-rise shophouses have had no tenants since they were sold more than a year ago.

In a row of them with doors closed and bolted, a few are under refurbishment in a bid to attract tenants.

A shophouse with an area of 180 square meters, sold at nearly VND80 billion over a year ago, has a market rental of VND80 million a month, but few are leased.

Hung, a real estate agent in Hanoi, said many shophouse owners have had to put them on sale at 20-30% below market price since the pressure of repaying loans is intense.

Some are trying to find tenants, but that is a difficult task since many are in new urban areas where populations are still low, he said.

At places outside Ring Road No.3 and others far from the city center, it could take five to seven years for the population to increase enough for shophouse rentals to become lucrative, he said.

Vo Hong Thang, deputy director of R&D at real estate consultancy DKRA Vietnam, too said the main reason for market’s weakness is the unfavorable locations of shophouses.

Besides being from the city’s main areas and having low populations, they also lack infrastructure and utilities, he said.