HCMC shophouse rents plunge 30% amid low demand

By Gia Khanh   October 1, 2023 | 03:09 pm PT
HCMC shophouse rents plunge 30% amid low demand
Shophouses without tenants in District 1, Ho Chi Minh City. Photo by VnExpress/Gia Khanh
Shophouse rents have plunged by 30% in Ho Chi Minh City so far this year, but still many locations are shut down due to lack of tenants amid economic difficulties.

Lan in District 1 has recently rented her shophouse for VND65 million a month, down 26% from before Covid-19, after having left it deserted for two months when she was unable to find a tenant.

"If I do not lower the price, both renters and I will face difficulties. I will not have tenants, while would-be renters will not have enough resources to resume their business."

The road where her shophouse is located, Le Thi Rieng, used to be filled with hair salons, nail spas and cosmetics stores. But it now looks deserted as many businesses have shut down in the last three years.

On another District 1 road, Cach Mang Thang Tam, a shophouse which was rented for VND200 million ($8,228) a month before the pandemic is now being leased for VND130 million, a 35% drop.

The owner is at the same time trying to sell the house but has yet to find a buyer.

Many shophouses with two or three floors in HCMC are in the same situation, with signs saying "vacancy" out front for months.

Interest in HCMC downtown shophouses has plunged 6% year-on-year due to difficulties in consumer markets, according to a second-quarter report by listing platform Batdongsan.

A survey by property consultancy Savills found that shophouse rents in downtown HCMC have plunged 8% annually since 2019.

Occupancy for shophouses with an area of around 500 square meters is now at its lowest point since the last quarter of 2022, the survey reported.

Phuong, a broker in the city, said that many prime locations have not been leased for nine months or more and landlords are reducing lease rates by 30% for at least the first 12 months to attract tenants.

Landlords are also offering lower deposits requirements, down from three to six months to one or two months. Some even offer free internet or water bills.

Property analyst Le Quoc Kien said that the pandemic forced many shops to shut down and economic challenges this year have made it impossible for them to resume operations.

Another issue is that buyers are transitioning to online shopping, and therefore brick and mortar stores are needed less, he added.

Rents will continue to be around 20% lower than in 2019 from now until the second quarter of next year, he forecast.

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