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Apartment Rental Market During Covid-19

Posted by admin on August 26, 2020
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Affected by the epidemic COVID – 19, from inns to high-class apartments all fell into a dull situation. The rental housing market is facing the risk of a long-term crisis.

The trend of building high-end inns for rent has appeared in recent years. Most of these inns are built in high-rise buildings enclosed in the nooks and crannies of big cities. The rental price ranges from 3.5 – 5 million VND / month depending on the area and the equipment from beds, kitchens, washing machines, air conditioners, etc. These inns attract many students and young families than low-end inns.

However, the COVID-19 epidemic has taken place since the beginning of 2020, causing many students and new graduates to return to their home town. The epidemic lasted, the income of many workers decreased, so they look for cheaper accommodation instead of the expensive inn as before. Many landlords invested a lot of money, even borrowed from banks are suffering because the tenant is moving out.

Mr. Minh Anh, the owner of an inns in Hanoi, said “I have 100m2 of land, decided to build a 6-story house with 15 rooms. My family stayed in the 2 rooms and the rest is for rent, starting at the end of 2019. The cost of building a house with an elevator and fully furnished room equipment is up to 5 billion VND, a bank loan of 2 billion VND ”.

According to Mr. Minh Anh, each month, he earns 60 million VND from the rental room, excluding electricity and water if all the rooms are taken. “But from the beginning of the year until now, there have been problems, guests check out continuously. Currently, the number of empty rooms occupying almost half of the building despite the effort of looking for a new tenant. At this rate, the rent is not enough for me to pay bank interest ”, Mr. Minh Anh said.

Ms. Thao (Cau Giay, Hanoi) said that her family 5-story building has also been sluggish since the 2020 Lunar New Year until now. “Around this area, there are high-rise buildings for students to rent. Now, every inn, apartment has a discount. Neither do I have any tenants. The inn I have just been operating for 2 years has not been able to recover the capital, but now with the epidemic, the monthly rent is not enough to pay the bank interest” Thao said.

High-end apartments have to lower prices

Listing for rent luxury apartment Mipec Long Bien (Hanoi) for nearly 2 months now, but Ms. Han has yet to see tenants despite a 3 million VND discount compared to before the epidemic. The 3-bedroom apartment with more than 100m2 and modern amenities worth 18 million VND / month before the epidemic, now reduced to 15 million months. “Previously, there were a lot of foreigners renting in the apartment building, but due to the epidemic, they still haven’t come. Some people asked for too low prices so I cannot rent out. If the situation is too difficult, I will sell the house”, Ms. Han said.

According to the information posted for renting apartment Imperial Plaza Giai Phong (Thanh Xuan, Hanoi) on Facebook, the apartment management board was sent by owners to rent more than 20 apartments with 2-3 bedrooms, area 83- 134 m2, basic furniture to fully furnished, price from 8-14 million. The rental price now is 1-2 million / month cheaper than usual.

At the Mandarin Garden (Thanh Xuan, Hanoi), the 114-134 m2 apartments, which rental price 800-1000 USD / month, are always crowded, but now, they lower 100-200 USD compared to before the outbreak but also less tenant.

Mr. Tran Hoai Linh, General Director of VNO Group, said that the rental housing market is being negatively affected by the second wave of COVID-19 with 2 specific manifestations: price reduction and low demand. Apartments for rent from the price of 15 million / month or more began to fall into the group of difficulties and easy to lose customers. Luxury apartments for rent with a monthly price of thousands of USD are at high risk of vacancy, more dangerous than mid-end and low-end apartments. Meanwhile, townhouses are also under strong pressure to reduce rents due to declining demand for rent.

According to a survey by VNO, demand for high-end housing is falling because foreign experts cannot come to Vietnam. In addition, the rental budget for senior leaders is also recovered to overcome difficulties in service. Many tenants will pay back high-priced homes to find a lower-priced home in order to save costs and reduce financial pressure.

Mr. Linh assessed that all rental housing segments are adjusted to a new price level, 2-35% lower than the location in 2019. This is the fastest and strongest discount cycle of real estate. rental for the past decade.

General Director of VNO Group added that since the appearance of the new COVID-19 wave, tenants have become more reserved and it is more difficult for tenants to find vacancies than before. The solution to this situation is that the landlord should flexibly share the difficulty with the tenant by adjusting the rent price to avoid leaving the house empty.

Credit: Ngoc Mai – Tien Phong


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