The Land Law does not allow foreigners to buy houses in Vietnam, so rental houses for foreigners has become a lucrative business for many companies in big cities such as Hanoi and Ho Chi Minh City.
After the ground has been bought and the house has been built with modern internal decoration and appliances, foreigners may rent the house at a price of VND 40-50 million per month. In this business, many companies and residents have earned big incomes.
Ngo Van Nam Road in Ho Chi Minh City’s Ben Thanh quarter is considered the “Western” street, specialising in renting houses for foreigners, and as “downtown” of businessmen in the area for house rental. Although it is a short road, about 200 m, with about 70-80 houses, nearly all householders here rent their houses for foreigners. Even houses of only 150-200 m2 may be upgraded into villas or high class apartments. With an investment of VND 7-8 billion for improvements, every month owners may get USD 2,500-3,000 from foreigners.
Richer due to house for rent
Upgrading houses for rent to foreigners is not only the tendency of estate businesses, it also attracts a lot of small investors. They are householders at locations with favourable transportation and commerce, belonging to central districts. They are ready to invest a lot of capital to renovate and gain benefits from their property. Nearly all householders that rent houses to foreigners in streets such as De Tham, Ngo Van Nam and so on, get richer, based mainly on the monthly house rent paid by foreigners. Even householders with limited finances see the potential to earn easy money from their property, and go to great effort to borrow and build high class apartments for rent to foreigners. Many householders rent houses for themselves while their own houses are rented to foreigners to get huge benefits from the favourable situation of high housing demand for foreigners.
A lot of residents in the “west” streets become rich from renting houses to foreigners. Mr Nguyen Van Tam said, currently his family has 5 houses in districts I, III, and V rented to foreigners. The lowest rent is US$2,500 per month; highest rent is US$3,800 per month. Every month his family gets more US$15,000, or near VND250 million.
Mr Tam added that it is not only his family, but a lot of other householders also have 3-6 houses for rent to foreigners and become rich in this business. Many among them have even entered the estate business naturally through the houses for rent. In addition, many householders having 5 - 10 apartments become really big capitalists, having projects on house construction for rent to foreigners based on the finance accumulated from houses for rent in the beginning period.
Companies are not outsiders
In accordance with current urbanisation and international economic integration, the market on houses for foreigners in big cities is increasingly “hot” due to growing foreign investments into Vietnam. More and more foreigners come to Vietnam to find investment opportunities and to do business. In addition, many among them come with their families and colleagues, so houses for rent are in great demand.
Meeting the demand for apartments, a lot of companies that invested in the estate business in the past turned quickly to building high class apartment blocks for foreigners. According to Mr Towsend, General Director of CPRE VN Company, from now to 2010, in Ho Chi Minh City there will be 15 projects building skyscrapers and apartments bocks for rent to foreigners. Nearly all the projects are designed in accordance with modern house style and international standards. Rents for these apartments will rise in coming years; they do not stop at US$ 2,500 – 3,000 per one apartment. And in the future, rents may rise to US$ 4,000 per month or even higher. Apartments for foreigners in Ho Chi Minh City in the future will also turn on the tendency of modernisation and comfort, and prices will be at the level of the housing market in Singapore. To give one example, Mr Mart Towsend spoke about several big projects in Ho Chi Minh City that will be completed in coming five years, such as the Gemadept project with an area 16,500 m2, to be completed in 2009, the M&C Tower project with an area up to 35,000 m2, the Times Square project with an area of 31,000m2 and the Financial Tower project with area up to 100,000 m2 to be completed in 2010. Almost all the projects have been designed on the model of multifunctional housing, including trade centres, office blocks, high class apartments and so on.
Although a lot of householders do business renting houses to foreigners, the business is still small, so it meets only a part of the demand. To resolve the issues related to the lack of housing and to better serve foreigner’s demand for apartments in Vietnam, estate companies currently need favourable conditions to wrap up house projects that will have high economic performance.
At present, many domestic and foreign companies have been concerned about the housing market. Estate business is currently a great opportunity for investment and by companies and it brings high economic performance for companies that manage catch the chance.
A lot of projects of international standard houses for foreigners’ rent have been completed and gone into use such as: The Manor, ThuanKieuPlaza, My Vinh high class apartment block and so on. They pull rent ranging from US$ 2,000-3,000 per month. Rent is high, but the apartment blocks still get many clients because the market demand is great. Foreigner’s demand for apartments is growing. But there are not enough houses currently in the market; supply still does not meet demand. This is a great opportunity for Vietnam’s estate industry to gain high performance and remake “heat” for the previously frozen capital market.
N.X
Vietnamese
