Depressed market
Before the sudden eruption of the Covid-19 pandemic, there was hardly any townhouse available on a main street in downtown Ho Chi Minh City. Many people hoped and dreamt of renting a townhouse to do their business, but usually had to wait for months as most such properties were already taken.
Ever since the pandemic broke out and has continued to spread, several townhouses now lie vacant, as tenants have returned them back to the owners due to lack of customers shopping or eating out. On Suong Nguyet Anh Street in District 1, there are now many signsboards showing the properties are for rent. Pham Ngu Lao Street, once a bustling street with vibrant activity, is now more or less deserted and many houses have rental boards displayed outside for many months now.
Ms. H, the owner of a shop on Nguyen Thai Binh Street, said the landowner has reduced the rental price by more than 20%, but her business is still not satisfactory. She is trying to hold out for a few more months, in the hope that foreign tourists will be allowed to enter Vietnam, but the situation is still depressed. Ms. Nguyen Thi Thu, the owner of a townhouse with three floors on Le Van Sy Street in District 3, said that she had hung her rental signboard more than two months back but there has been no enquiry till today. Recently, Ms. Thu decided to sell her house at a lower than market price in order to repay the bank loan, but still no one has come forward with an offer.
Similarly, Mr. Pham Van Thanh, the owner of a small house on Phan Xich Long Street in Phu Nhuan District, is also ready to sell his house which he just bought in 2019. Thanh said he bought this house for VND 23 bn and spent another VND 2 bn on repairs before renting his ground floor for VND 30 mn per month. Thanh said that in the beginning the rent was very convenient, but when the pandemic broke out there have been no customers so he has decided to sell the entire house for VND 24 bn. He said it was a very painful decision, but he has to accept a loss, because he has to pay the bank interest every month. He also needs money to send to his daughter who is studying in South Korea and to run his own company.
Many commercial townhouses and shops in Phu My Hung are also lying vacant. In District 7, although thousands of apartments are occupied, shops are still vacant. For example, the Belleza apartment building in Phu My ward in District 7 has still many shops and retail spaces lying vacant and only a few shops are seen selling food and drinks. The retail space on the ground floor is quite dull, and the first and second floors are also not attracting any tenants either.
The Covid-19 pandemic has impacted customers and shop owners who are struggling to find tenants. Many shops already on rent have had to offer better ground floor space or lose deposit. At the Park Residence on Nguyen Huu Tho Street in Phuoc Kien Commune in Nha Be District, most apartments are fully occupied, but many rental spaces on commercial floors have been returned back to owners, who continue to look for more customers.
Temporary setback
Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoSEA), said that the reason for this slump is that customers rarely now go to stores, shops, or restaurants to eat, but order most of their needs online, as they have to comply with social distancing rules. Under normal circumstances, people would have loved to browse in shops and malls, or go to bars and coffee shops, or even visit each other. Mr. Le Hoang Chau feels this situation is a temporary setback and will pass after a period of time.
From a customer's point of view, Ms. Long Giao said that buying and selling online is quite convenient, but buyers have to completely depend on the integrity of the seller. Ms. Giao shared that initially she used to buy goods online, but many times, the seller delivered bad quality goods so she had to go physically to the store to buy.
Ms. Nguyen Thanh Huong, General Director of Dai Phuc Land, said that commercial townhouses or shops in the city center or in new urban areas, are not only shopping places, but also destinations for tourists to visit and enjoy foods and buy souvenirs. Therefore, townhouses still have certain value. In the last few months, the return of townhouses was mainly from small businesses who could not afford long term business plans.
According to a survey by CBRE, in the third quarter of 2020, retail prices and townhouses have not shown any signs of improving. Compared to the peak selling price in the middle of 2019, townhouses continue to cool by an average of 2%. However, over the same period, private houses and alley houses have maintained flat selling prices, but houses on main roads are being offered at 3% to 5% lower prices.
One investor believes that townhouses on residential streets are always of great value, with either the buyers are already very rich, or the businesses renting them have long-term plans. At present, the slump in the general economy is not bringing any customers to such properties, even at lower rentals. However, one can still be optimistic in thinking that this phase will end sooner or later and recovery will then bring markets back to normal.
