Gov’t support called for condo-for-rent market

Le Hoang Chau, chairman of the HCMC Real Estate Association (Horea), said developing the condo-for-rent market would help provide affordable housing for those whose financial capacity is not strong enough to buy commercial homes.

Most apartment-for-rent projects are high-end and target foreign tenants. It is thus difficult to search for a fully-equipped flat with a monthly rent of VND2 million ($96) at this time.

If the handover of flats in the Bee Home project in HCMC’s Tan Binh District in July is on schedule, C.T Group will be one of the first in the sector in the city to join the apartment-for-rent market.

The total construction area of Bee Home is 16,500 square meters. The project has 2 four-storey blocks with 315 condos of 30 square meters or above a unit.

The total construction area of Bee Home is 16,500 square meters. The project has 2 four-storey blocks with 315 condos of 30 squares

Like other commercial apartment projects, there are multiple facilities like a gym, kindergarten, library and restaurants in and around the buildings.

The developer hopes Bee Home will be suitable for a modern lifestyle of young homebuyers.

The firm offers tenants 2 levels of rent: VND278 million ($13,358) for a 12-year contract, or VND1.93 million a month, and VND144 million for a 6-year term, or about VND2 million a month.

Apart from C.T Group, Le Thanh Company is targeting office workers as potential customers to develop condos for rent on Vo Van Kiet Boulevard in HCMC’s Binh Tan District.

Le Huu Nghia, director of Le Thanh Company, said his firm would invest VND50 billion to build an apartment building with 220 units covering from 30 square meter each to explore local demand after a long time of developing commercial apartments for middle-income people.

The monthly rent for serviced flats that are fully furnished ranges from VND3.5 million to VND4 million a unit, Nghia said, adding his company expected to break even 8 years after this scheme is put into service.

Nghia’s company has available land for the project but has yet to start work on the project due to the current gloomy housing market and capital shortages.

It plans to start work on the project next year.

Chau of Horea said he had high hopes for the condo-for-rent segment as demand for stable accommodation was high.

The ratio of home tenants in other countries accounts for 80 per cent – 85 per cent while the figure in Vietnam is only 10 per cent - 15 per cent.

The need of government support

An architect, who declined to be named, said developing social (low-cost) housing was a responsibility of the Government toward the poor. So the Government should play a decisive role in the process.

He pointed out existing policies did not work and had failed to attract industry players to participate in the housing-for-rent market given their difficult access to capital and land.

Nguyen Van Danh, deputy director of the HCMC Department of Construction, in a meeting with Horea last week said incentives for social housing developers were not attractive. Because of little profit, Danh stressed, local firms mainly focus on commercial housing projects.

Chairman Chau of Horea suggested the Ministry of Construction should treat developing apartments for rent as part of the national target program for housing development. From a business point of view, it is a tough job to persuade property developers to pour huge amounts of capital into projects that bring in meager incomes in the lifespan of the projects.