In mid-July, many townhouses, mostly 2-3 storied buildings, usually rented out by offices, tea shops, dental clinics, spas, travel agencies and other businesses, in the heart of District 1, the most prime location, stand vacant with for rent signs and landlords’ contact information.
Binh, a District 1 real estate broker in business for nearly 10 years, said this was the most severe crisis for the rental market he has seen. Instead of customers lining up to rent townhouses and owners charging high rents, landlords are facing a wave of rent cuts and termination of tenancies, he said.
Even though many owners have reduced townhouse rents, the number of tenants remains low, signaling a drop in demand for commercial property at the moment.
A recent report by Ho Chi Minh City-based real estate consultant Savills says that the Covid-19 pandemic has forced many dining, fashion and other businesses in the service sector to close down due to a drop in sales.
Savills said potential tenants are looking for place with rental discounts of up to 40 percent from last year.
According to a survey by real estate consultancy CBRE, townhouses have advertised rental reductions of 10-20 percent over the pre-pandemic period. The leasing period is shorter at 2-3 years, compared to the earlier five years.
Many businesses are also postponing opening at new locations till the situation improves, industry insiders say.
Nguyen Loc Hanh, General Director of HCMC-based real estate firm Ngoc Chau A, said the trend of rising vacant commercial properties in prime locations is likely to last until the end of the year or when businesses feel it is safe for them to reopen.