Compared to the previous 8 months, the asking price of high-grade apartments for lease in Saigon is trending down quite deeply. The cause is attributed to the explosion of new supply, which appears locally on a large scale, as a source of saturated demand and a direct impact on the market’s rent.

The smaller the area of ​​rental yield is more likely a 3-4 bedrooms-apartment, that investor will have to rethink. Luxury apartment rent in Saigon fell sharply. CBRE Vietnam has just released a report on the apartments for lease in Vietnam by slicing transaction data in its system. The statistical data in this report decodes the real situation and paradox of the market in the past time.

Small apartment has higher profit than the big one

Statistics from the transaction in the system of this unit, one-bedroom apartment, minimum area of ​​45 m2 has invested in furniture, the rate of rental yield is 6-7% per year. Meanwhile 2 bedrooms-apartment, minimum area of ​​75 m2, completed, profitability ratio of 5.5-5.8%, and 3 bedrooms-apartment, 110 m2 profitability ratio is only 5.2-5.5% .

If investment 4 bedrooms-apartment, area of ​​about 150 m2, the total investment capital increased a lot, profitability rate of 5.6-5.7%. This survey shows that the smaller the area is, and the lower the investment is, the better the profitability of larger apartments.

High renting price do not guarantee high profits

The number of long-term tenants for short-term rental is increasing, and with more and more visitors coming to Ho Chi Minh City, this is an effective way to optimize revenue from high-end apartments. .

District 1 is always very high rent price leading the market of Saigon apartments for lease because the prime location and the real estate are class. One project has the highest rent in this area recorded 4,600-6,300 USD per month but the rate of return is only 3-4% per year. The highest rents in District 1 also stood at 6.5% per year.

Meanwhile, Binh Thanh District, which has the highest rental price of $ 2,200-4,500 a month, has a profitability rate of 8.5%. Minimum rental margin in Binh Thanh district reached 5% per year. In District 2, the highest rent for apartments is about $ 1,200-2,500 per unit per month, the profitability rate is up to 7%. The minimum rental income from District 2 is 4.5-5%.

This data shows that high rents (ie, large investment) are not synonymous with high margins. Evidence is that apartments in District 2 have lower rents than District 1 and Binh Thanh, but the profit margin is much better.

Large-scale rental projects, but average renting price

The view that the apartment project is large, convenient utility, the high rent is not true to the reality is happening to the market of apartments for lease in Saigon. Survey from the CBRE system shows that apartments located in large scale projects, many green trees and utilities are rented at an average level due to the density of residents living here is too crowded. Tenants in large-scale projects usually come from Asia, including Japan, Korea, Taiwan and Singapore.

In contrast, the apartments are located in small scale projects, separated, limited local amenities, the product falls into the high-end segment, luxury and rent rise to the very high. Tenants are from Europe and America.

High demand for cheap price but too many supply for high price

The rents of apartments under $1,000 surged, accounting for nearly 30%, but the opposite is happening to apartments for rent in Ho Chi Minh city as the source of supply to customers with rents in the $1,100-2,000 range is leading lead the market. If this situation continues in the coming years, supply and demand will be difficult to meet, especially for the segment of cheap rental apartments.

In addition, due to the high rents of high-end apartments, the scarcity of goods for too long, resulting in huge new supply has led to a sharp drop in prices. Medium and low end apartments are not affected much because the supply is still lower than demand. The flat price of this segment is quite cheap and lack of supply should not be under pressure.

These information above might help you when thinking of investing in apartments for lease in Vietnam, especially in Ho Chi Minh city, where the living speed is very high. Let’s do more research before you decide to put a big amount of money into anything!

Thang Tran – RaoXYZ

>>> Top 5 best serviced apartment in Ho Chi Minh city