Expats enjoy low house rents in economic recession
Expats enjoy low house rents in economic recession
Vietnamese landlords have to lower the rents and offer more preferences to retain foreigners – the VIP clients who never delay their payment – in the context of oversupply.
A lot of Vietnamese have been living well over the last many years by leasing houses or apartments to foreigners. In general, the houses or apartments for rent are the high grade ones with modern designs, luxurious interior decoration and good conditions. The clients are the foreigners who stay in Vietnam for a long time and need accommodations for long term.
However, their business has been meeting big difficulties in the last two years due to the economic downturn which has led to the oversupply. In Quang An Ward of Tay Ho district, which is called the biggest “westerners’ village” in Hanoi, one can see the banners offering house rents hung in abundance at the entrance doors.
Nguyen Van Binh, a broker of Fair Real Estate, a firm headquartered at No. 6 To Ngoc Van Street, said landlords all have to lower the rents because of the decrease in the number of clients and the increase of supply.
According to Binh, the rents have decreased by 20 percent in comparison with the same period of the last year.
Expats now can rent a one-bedroom apartment at $500-700 a month, while a 2-bedroom apartment at $800-1,500. The expats who rent houses in Quang An Ward are mostly diplomatic officers, English teachers, workers of foreign representative offices or workers at industrial zones.
Dang Van Hoi, Deputy Chair of the Quang An Ward People’s Committee, said despite the economic recession, the number of people having valuable assets for rent still keeps increasing. It is estimated that 800 households here have rooms or houses for rent.
The households paid VND13.2 billion in tax from the business to the state budget in 2012, while the figure is expected to decrease to VND12.8 billion in 2013.
However, Hoi believes that the decreases are moderate if compared with the real estate market fall. The houses in Quang An ward are still in high demand, because it is located between the Red River and the West Lake, near the famous historical and cultural relics
Meanwhile, a local landlord said he has been struggling to overcome the current difficulties. Not only having to reduce the rents, he has offered free room cleaning, security guard, car and motorbike keeping services to retain clients.
The global economic crisis has forced expats to tighten their belt. Instead of signing the contracts on leasing houses for one year, a lot of clients now only sign short term 3-6 month contracts only.
“Some of them have decided to rent narrower areas or asked to share rooms with others,” he said.
According to Binh from Fair Real Estate, the supply comes from three main sources 1) the apartments developed by households 2) the owners of the apartments at residential quarters such as Ciputra, Trung Hoa – Nhan Chinh, My Dinh – Song Da lease to foreigners and 3) the apartments provided by some enterprises specializing in developing apartments to lease to foreigners.
The economic recession has not only made the landlords suffer because of fewer clients, but also dealt a blow on real estate brokerage offices. Most of the offices can earn modest sums of money which is just enough to cover office expenses and pay workers.
vietnamnet
