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High grade apartments sit empty and silent   2010-09-14 - Tuoi tre

Owners of high grade apartments have all been lowering rental charges to lure clients. Daily, the number of vacant apartments has been increasing. A lot of investors, who purchased apartments for later resale or lease to earn a profit are now like cats on hot bricks.

 

 
Tuoi tre has reported that a lot of new apartment projects have been completed and many will be delivered to clients soon. Their sources say the market will have an oversupply, as the number of clients able to rent such apartments is limited.

 

Showing Tuoi tre reporters an apartment at Central Garden in HCM City, Minh, a real estate broker, remarked that he has never seen such a dramatic rental decrease. A 90 square metre apartment with two bedrooms and good furniture can now be rented for only 14 million dong per month (about $700). It was once leased at $850 per month, but the tenant left when the leasing contract ended.

 

Minh revealed that many other apartments in the building are also leased at rates down by $100-150 per month in comparison with one year ago.

 

At Saigon Pearl, an area with “five star standards”, rental rates have also dropped sharply. For example, an apartment at SG Pearl Ruby 1 with two bedrooms (84-89 square metres), plus good home comforts and interior, is now offered at $800 per month, a decrease of $150-200 from previous rates.

 

The list of buildings in the same predicament is growing:  Cantavil An Phu in District 2, Cantavil Hoan Cau in Binh Thanh, The Everich in District 11 and Hung Vuong Plaza in District 5 all have seen the rental charges decreasing.

 

Even though the rents have eased, it is not easy to find tenants. H, the owner of an apartment with three bedrooms at Central Garden, has not found a renter over the last month.

According to a real estate company director, there are too many new high grade apartments put into operation recently, leading to the sharp climb in supply. Meanwhile, demand has not increased, so leasing fees have plummeted.

He pointed out that The Manor Officetel in District 1 alone provided 620 new apartments, while 300 apartments opened at The Everich I in District 11 at the end of 2009. Another source observed that 530 apartments of Sapphire building will be delivered in 2010 and there will also be thousands apartments at projects like The Vista and The Estella.

 

In addition to high grade apartments, projects in lower market segments like Orient Apartment or Constrexim in District 4, each of which has hundreds of apartments, have also been opened. The majority are leased with “soft” rentals.

 

“Though the rents have eased, they remain relatively high and unaffordable for many people who have real demand for accommodation. The number of people who are financially able to rent these apartments is really modest,” a director of a real estate firm maintained.

 

Potential tenants of the apartments are expats, overseas Vietnamese who return to Vietnam to do business, and some Vietnamese with high incomes.

 


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