HCMC shophouses on the shelf

By Nguyen Tieu   January 14, 2024 | 08:04 pm PT
HCMC shophouses on the shelf
Shophouses in Long Truong Ward, Thu Duc City, Ho Chi Minh City, November 2022. Photo by VnExpress/ Quynh Tran
Shophouses are no longer lucrative in HCMC because of high costs but low rental demand, which has dragged rents down, and so have few buyers.

Phuong of District 3 said in 2020 he had bought a shophouse in an urban area on Song Hanh Street, District 2, for VND15 billion (US$600,000), including VND10 billion from a bank with a two-year interest waiver.

Since late 2022, when the waiver period expired, he has been paying nearly VND180 million to the bank each month.

His original plan had been to wait for housing prices to increase before selling it, leasing it out in the meantime.

But the area is thinly populated, and so the shophouse is vacant more often than not. The rent he receives occasionally is not enough to pay a third of the loan interest.

He is reconciled to selling it at VND11 billion, but cannot find buyers. According to real estate consultancy Savills Vietnam, shophouse prices shot up in recent years.

In 2017 the average price in the primary market had been VND55 million per square meter, but surged to VND120 million by the end of 2018. It kept rising in 2019-21 and currently stands at VND250 million.

However, their rents did not increase correspondingly, and even declined due to the economic situation.

Another real estate consultancy, Cushman & Wakefield, said rental yields from shophouses is very low at just 1-1.5%, and in the busiest urban areas could reach 2-3%.

According to Trang Bui, its executive director, the shophouse business depends heavily on management but is rarely managed by specialized outfits with retail experience.

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