Door opens to new property trend

Since Hanoi’s tenement market was in the doldrums, individual investors sought to offer their properties for lease to raise extra money on the back of a dormant property market.

Viet Hung new urban area in Hanoi’s Long Bien district hosts scores of quality tenements for lease with ‘soft’ rental rates. There a tenement with areas ranging from 80 to 110 square metres is charged at VND6.5-7.5 million ($300-$350) per month. Rental rates for small units are between VND5.5-6.5 million ($260-$300).

In a time of low market liquidity, leasing apartments is regarded as the best option.

Similar in area and interior furnishing conditions tenement rental rates in Hanoi’s Thanh Xuan, Cau Giay and Tu Liem districts are 1.5 to 2-fold more than those in Viet Hung. Initial investments put into these properties are bigger chunks.

Current rental rates for 80sq.m-120sq.m tenements in Trung Hoa-Nhan Chinh new urban area run between VND12-15 million ($570-$710) per month. The rates are softer in Phung Khoang and Tran Thai Tong areas in Cau Giay district and My Dinh area in Tu Liem district at VND7-10 million ($330-$470) per month.

According to some property consulting firm reports, Hanoi’s tenement rental rates would further be eased in 2012 as a  sequence of apartment projects are due to come onto the market.

In early 2012, Minister of Construction (MoC) Trinh Dinh Dung underscored the need for restructuring the property market with priority given to developing social housing.

Dung said the MoC had proposed the government introduce specific policies to different social housing customer groups. Accordingly, the state would offer incentives to building social housings and strive to have in place resettlement house and house for lease funds to meet increasing needs from people particularly urban dwellers.

In light of national housing development programme to 2020 with a vision towards 2030, the MoC is determined to pull down property prices to reasonable levels to fit the budgets of most people.

“The root of the problem is property firms need to rearrange investment activities. In the past firms focused on serving wealth-off people, now they should target the bulk of the population with medium and low-end housing,” said Dung.