The situation of investment in apartments for rent in Ho Chi Minh City

Currently, many people tend to invest in apartments for rent in Ho Chi Minh City as stable profitability but the market situation is fluctuating with caution!

Demand for investment in apartments for rent has increased recently, why?

According to CBRE Vietnam’s report, over the period from 2016 up to now, more than 40,000 apartments have been offered for sale and up to 70% have been purchased for lease. It can be said that the investment demand for apartments in this period is quite high because in 2016, Ho Chi Minh City real estate market started to recover after a long-term freezing period.
There are many investors after observing, monitoring that the market has had good changes, rushing to buy mid-end and high-end apartments to rent to catch up with the economic growth. But after only a year, the sudden increase in the supply of apartments has caused rents to slow down and go down quickly, causing many investors to worry.

The situation of investment in apartments for rent in Ho Chi Minh City in 2018

In the past months of 2018, the investment in apartments for rent in Ho Chi Minh City has tended to fall sharply due to the oversupply, creating great competition. Typically, in some cases, investors in District 7, renting apartments at the initial price of US $ 1,000 / month but last August was forced to reduce rents to 3 to 4 million because the market has a lot of apartments. Rent to choose at much lower prices.

Or as some investors of a 120m2 apartment in Cantavil District Binh Thanh said the apartment was priced at 5.2 billion VND at the time of purchase but could only rent at the maximum price of about 22 – 23 million VND / month. , reduced to 3-4 million compared to the previous because if not reduced, it is difficult to find tenants while the surrounding housing area has many apartments only from 15-20 million / month. According to the average rental price at this time, the profitability ratio for the rental apartment is calculated lower than the one-year bank deposit.
According to some preliminary reports, the situation of renting middle-class apartments in Ho Chi Minh City has reduced the rental price by about 10 to 15% in recent years. Particularly in the East Saigon, especially District 2, investors reduce the rent from 40-60% to find new tenants. Although the rental price has decreased quite a lot, the situation of finding tenants is still poor and sparse; It is imperative that investors have to sell to recover capital quickly.

The main reason leading to this situation is that from 2015 to 2016, the number of luxury apartments has been built and built too much and investors have gathered goods to wait for the time to transfer or rent good prices but come. In 2017-2018, the number of delivered luxury apartments was larger than expected, creating a supply-demand imbalance.
In addition, as we have seen, in 2017 to the first months of 2018; affordable apartments, mini-apartments, low-cost townhouses … are developed in large quantities at prices that most Vietnamese middle-income people – can afford. This has led to a sharp drop in the number of tenants of high-end apartments to buy or rent cheap apartments or townhouses, but having the same facilities as high-end projects.

It can be said that the current situation of investing in apartments for rent in Ho Chi Minh City is causing many investors to be disappointed and have to “flee for one’s life” because they cannot bear taxes, brokerage fees, and maintenance costs. – repair, depreciation, management fees … during the vacant apartment, nobody rented and added to the depreciation rate of money makes them even more bored. By this time, the average percentage of vacated apartments for rent is about 10% – 15% per year. With the above general situation, many investors have gradually shifted to investing in townhouses, land plots or investing in cheap apartments for long-term lease.