City residents ditch flats as villa rental costs drop

(16-05-2009)

HCM CITY — Rent for villas in HCM City dropped recently due to oversupply and the world recession.

In the south of HCM City, rent has dropped by around US$500 per month.

The cost to hire a fully-equipped 126 sq.m two-floor villa in District 7 fell from $2,000 to $1,500 per month.

Quitting apartments

"At the beginning of 2008, it cost $3,000 to hire a 100 sq.m luxury apartment in the Phu My Hung area, but now you can get a 300 sq.m luxury villa with a swimming pool," said Pham Quang Hai, head of the trading department of Vinaland, a land consultancy company.

Due to the falling prices, some customers are abandoning their apartments in favour of more spacious digs.

Kim Mun, a man from South Korea, recently hired a three-floor villa in the Phu My Hung area for only $1,200 a month.

"Previously, I hired a 100 sq.m apartment in My Toan 2 residential area at the cost of $1,000 per month. On second thought, I decided to move into a villa because it has fresh air, a garage and is fully equipped. The important thing is the rent is same," Kim Mun said.

Kim Mun is not the only renter who ditched his apartment, but despite these new additions, the real estate market is still faltering.

Since the middle of 2008, the rate of transactions for renting and buying villas in the Phu My Hung area has a fallen 40-50 per cent, according to a property broker.

A villa owner in Phu My Hung complained that he cut the lease by $500 a month, but still did not have any interested customers.

According to the CB Richard Ellis (CBRE) Viet Nam, the world recession is the main cause of the declining numbers.

Due to the recession, many foreigners working in Viet Nam, especially Europeans, had to return to their home countries, so the number of unoccupied villa increased, CBRE said.

Oversupply is another problem. In the past, investors bought and sold villas on speculation and waited for the market to heat up. Now that villas aren’t selling, they are being leased, flooding the market.

Experts predict rent will continue to fall by 10-15 per cent. — VNS

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