New strategies to make waves in housing market
New strategies to make waves in housing market
As Hanoi’s housing investors adjust to the slumping market, private homes for rent are facing tough competition from high-end apartments which were bought expressly to re-lease.
Examples of the evolving market can be found in West Lake area, long a popular destination for foreigners. Now many private villas are adorned with signs advertising their availability for lease.
Nguyen Van Khoi, a landlord in the area, said that his latest tenant just finished their leasing contract some weeks ago. He has been advertising for new tenants but attracting little interest.
“In the past I found it easy to lease my villa, but now it is so difficult, even though the price was negotiated at the most preferred level for the tenants,” Khoi said.
Meanwhile, a property agency said that most landlords are reducing prices, since many of their previous tenants decided to move to high-rise buildings, where they can enjoy better security and services.
Prices, according to this agency, have been reduced from 10 to 30 per cent compared with the same period last year.
The average price in Tay Ho now is from $500 to $700 for a studio unit and $1,000 to $1,500 for a two bedroom unit per month.
Khoi agreed that landlords are struggling to meet tenants’ demands.
“Alongside reducing prices, we are supplying more free of charge facilities and accept more flexible payments from our tenants,” Khoi said.
“We actually accept sharing or short-term contracts, which was not okay in the past,” Khoi said.
Tenants now have more options as a lot of apartments for sales have come back to the leasing market since homebuyers seek to earn a return on their investment.
According to Nguyen Thi Hai Minh, senior research manager from Cushman & Wakefield Hanoi, serviced apartments in Cau Giay and Tu Liem districts are facing tough competition from buy-to-let apartments.
Keangnam Hanoi Landmark Tower, The Manor and Indochina Plaza Hanoi are mostly coveted by foreigners.
“The buy-to-let trend continues adding competition to this sector and providing tenants with other options. However it is still evident that serviced apartments do offer better services and amenities that are sought after by tenants who may occupy them on both a long and short-term basis. Project developers and apartment owners offer apartments for lease across the city and in addition, some hotels are also considering converting part of their facilities into serviced apartments,” stated a CBRE report.
There is a major demand gap between buy-to-let and serviced apartment which encouraged many investors to buy apartments and sublease them.
At present, the monthly rentals at Keangnam Landmark Tower serviced apartments range from $2,000 to $2,400 per one-bed room unit and $2,600 to $2,700 for two bed-room units.
Nguyen Viet Dung, head of the leasing department at CBRE, said that some apartment-for-sale developers in Hanoi were considering converting their projects into the apartment-for-lease option.
The developers of The Lancaster in Ba Dinh district are pursuading their customers to convert their homes into serviced apartments for lease to foreigners.
Apart from that, some other developers are convincing their customers to buy and then sublease their apartments. Refico – the developer of the high-end apartment building Watermark in Hanoi, offered its customers a commitment to pay a leasing fee of up to VND80 million per month for a unit in the first year, regardless of whether the apartment can be leased or not.
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