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Is HCM City really lacking apartments for lease?
The well-known foreign real estate service provider CB Richard Ellis (CBRE) has released a report saying that HCM City is seriously lacking apartments for lease. Meanwhile, domestic real estate developers say that the city has never had as many apartments for lease as nowadays.
Apartments, apartments everywhere
According to CBRE, which gives market forecasts monthly, there are only 3,000 apartments for lease in HCM City, while there are 81,000 foreigners living in the city, who find it very hard to find accommodations. The company said that leasing fees are increasing with the leasing fee of A-class apartments nearly hitting $50/sq m a month.
Savills Vietnam, a consultancy service provider, recently released a report which forecast that the highest leasing fee would be no more than $30/sq m/month.
Meanwhile, domestic real estate developers do not think that the market is as thirsty for offices for lease as CBRE. Tran Minh Thong, Deputy Director of HCM City-based Minh Long Real Estate Brokerage Company, said: “I wonder what criteria CBRE used to make the conclusion that the city is lacking offices for lease. The reality is far different from what CBRE said.”
Thong cited the district 7 area as an example, saying that apartments there have been in excess for the last 3-4 months. Apartments in Hung Vuong, Sky Garden and Phu My Hung urban areas, which previously had the leasing fee of $1,000/month on average, now are being offered for lease at $800/month.
The HCM City Real Estate Business Association has also released a report which said that high-grade apartments for lease to foreigners are now in excess.
Moreover, Lam Van Chuc, General Director of Phuc Duc Real Estate Company, said that some 60 high-grade apartment building projects with more than 10,000 apartments will be put into operation in the near future.
Be wary of information
The thing that most real estate developers are worried about now is that the information about the apartment shortage will ‘distort’ the leasing apartment market.
Pham Minh Thao, a real estate broker of Hai Minh Real Estate Company, said that a lot of clients came to ask whether apartment leasing fees would increase. Meanwhile, owners of apartments are trying to increase leasing fees while the supply is bigger than the demand, especially in districts 2, 7 and Binh Thanh.
Thao said that foreigners now find it very easy to find apartments with leasing fees of less than $1,200/apartment in districts 2, 3, 7 and Binh Thanh due to the oversupply.
In 2007, forecasts about the shortage of apartments for lease prompted people to rush to buy apartments. Many of the people have suffered heavy losses due to the purchases as real estate prices have decreased and been frozen since the end of 2007.
Domestic real estate developers have raised questions about CBRE’s motive for giving the forecast about the apartment shortage.
Dr of Economics Doan Ngoc Long said: “If we note that CBRE and Savills Vietnam are dominating the apartment leasing market, we can understand.”
Long said that in fact, the real estate market is still freezing with very few successful real estate transactions.
VNN
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