Vietnam expat is on the hunt for hot property
Expat renters in Ho Chi Minh City weigh up location, price and environment before signing a lease, but ultimately many long term residents would also like to buy property.
Saigon Pearl Vietnam
As Vietnam’s economy picks up pace once again, foreign workers are now returning in numbers to Ho Chi Minh City boosting demand for high-end accommodation in the country’ largest economic hub.
In the daunting urban sprawl of Ho Chi Minh City, for newcomers location is clearly still important but price and security are now also key factors for expat renters.
After arriving in Ho Chi Minh City eight months ago, Dolev Sunshine Sadan, a 26-year old Israeli, is delighted with his 10-minute commute from Binh Thanh district’s Saigon Pearl apartment to his downtown office. But Sadan, who works for a fashion distribution company, also reckons he’s getting a good deal with a monthly rent of $1,200 for his 110sqm-unit.
“I get a view of the riverfront with affordable rent right at the edge of the downtown,” says Sadan. “But what I like the most is the 24/7 security with cameras and good management.” Seemingly happy with his lot, Sadan will extend his one-year rental contract next year with a fixed yearly increase of 10 per cent.
“Renting a similar-sized unit at a serviced apartment complex in the central district would cost three times as much,” adds Sadan.
A more frugal market
A rise in expatriate presence is a positive indicator for the residential leasing market, and in particular, serviced apartment complexes are performing well.
Toon Saten, DKSH’s general director of technology, has spent most of his time in Ho Chi Minh City living at Phu My Hung’s serviced residence Waterfront Villas. He claims that living environment is most important for choosing accommodation. After that rent, and then location, are the determining factors.
“I have been in Phu My Hung for almost five years and found it to be the most modern place in the city with an emphasis on space and increasingly developed infrastructure,” says Saten. “I also like how the area’s light on traffic.”
However that may change as more people move to the Phu My Hung area. Access to downtown could be a problem for residents of Phu My Hung in future if the population doubles as expected. As a result, Saten may opt to move.
“I think Thao Dien will be a good alternative for me after Phu My Hung, if villas there improve in terms of layout, space and design,” says Saten. However, the majority of expats are coming with smaller housing budgets than those thrown about a few years ago. The market has seen expats’ budgets fall by up to 20 per cent this year.
These tighter housing allowances have led to tenants seeking locations in areas like District 2 and District 7, where you can find cheaper accommodation. A veritable glut of buy-to-let units in projects such as Avalon, Saigon Pearl, The Manor, Sailing Tower and Cantavil Hoan Cau are causing severe competition in the market forcing landlords to lower rents or even in some cases look for short-term tenants. In some cases landlords are now offering weekly or daily rates.
Christian Dutilh, a 41-year old from the Netherlands, lives in Binh Thanh district’s high-end apartment block, The Manor. He says living in a luxury condominium was not only a matter of convenience and affordability but also situation.
“I have lived in Vietnam since 1995 and sometimes I’ve found its hard for an expat to lease a serviced apartment in the downtown area,” says Dutilh. “Some developers/ landlords even have to seek government’s permission to lease out units to foreigners. This makes me feel as if foreigners are restricted to some serviced apartment projects.”
Tran The Anh, sales and marketing manager of the luxury residential project Cantavil Hoan Cau in Binh Thanh district, claims that his project’s premium location and high-end living environment and services appeal to expats. “Our main buyers are still Vietnamese, who want to put their units back into the market for lease,” says Anh.
Rent varies as some expats will rent from home owners; others will rent units directly from the developer. “The developer charges $2,100 to $2,800 per month for a unit depending on the size and view. Homeowners tend to offer rent for 10- 15 per cent less,” says Anh.
Plenty of options
According to CBRE, Ho Chi Minh City’s serviced apartment stock stands at around 3,250 units, in which there are some 980 Grade A, 1,500 Grade B and 770 Grade C units. The research company also said that 11 ongoing construction projects would provide some 495 serviced apartments later this year, and there would be some 900 additional units by next year.
The market has also begun to see new stylish boutique players enter the fray, with projects such as Lafayette De Saigon, LTT Court and IWA Square in District 1 and Glenwood in District 2. Linh Tran, director of Dragon Fly Limited Company – owner of newly refurbished LTT Court project – said: “As the local and regional economies have recently strengthened and more expats have been hired and the units have been taken up, only about 400 new units have come onto the market including InterContinental and Sherwood Residences.”
“Unlike in the office market where rents have softened and fallen by up to 40 per cent from their peaks in 2008, serviced apartments are now back to their pre-crisis levels and occupancies are filling again. As a result we are looking at serviced apartment options across the town in both mid- and high-end segments.”
“Our project LTT Court at Ly Tu Trong street looks to tap into young Asian expats that enjoy life on Ngo Van Nam and Le Thanh Ton streets for work and night-life entertainment,” says Tran.
Full ownership still a dream
“Yes absolutely, I think expats should be able to own their own apartments in Vietnam and the Vietnamese government is working towards this,” says Dutilh. “I now own an apartment at The Manor but just for 50 years – I can’t have a red book, can’t use the unit as a deposit for bank loans and I must transfer it back to its developers [after the term is concluded]. This is more like a long term-leased property rather than a full ownership one.”
He added that “there are more and more foreigners who have decided to live in Vietnam for a longer period of time, and renting a house is too expensive for them. It is only fair that they have a chance to buy an apartment not only to save money or to invest but also to call a place their “home”.
Though property prices in Vietnam are higher than those in some neighbouring countries, for expats living here for more than 10 years or so, Dutilh believes buying an apartment or villa would be much better and more economical than renting, as compared to property in most expats’ home countries, property in Vietnam was quite affordable. The problem is that it’s extremely difficult for expats to borrow money from local banks.
Source: Time out
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