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NEWS

Investors seek chances in condo-for-rent market

18-10-2012


Apartment leasing offers low-income earners affordable accommodations and helps project owners diversify their products to meet the market demand.

Le Thanh Commercial Construction Co. Ltd., for example, plans to lease out some 40 condos of the Twin Towers project in Binh Tan District in HCMC to gauge the market. The company will this Saturday launch the model condo for the project that consists of some 350 flats for middle-income buyers.

Le Huu Nghia, director of Le Thanh, said his company would offer 40 apartments of 35 square meters each for rent.

Each tenant will pay VND240 million in total, divided into five installments over a one-year period. Tenants can live in these apartments in 15 years, meaning the rental is about VND1.3 million per month.

This is a viable solution for middle-income earners in need of houses as the rental is not higher than that of rooms for rent. In addition, living in apartments in 15 years is enough, because after that the apartments will start deteriorating and the project owner will have to renovate them, said Nghia.

He said if the market response was positive, his company would develop more projects of this kind.

The Bee Home project of C.T Group on Nhan Tran Trung Street in HCMC’s Tan Binh District is another apartment-for-rent project. The project includes two four-story blocks with 315 flats covering 30 square meters each.

Each tenant will pay VND241 million for a 12-year rental, or VND1.7 million a month.

Investment in commercial apartments is more efficient than condos for rent, which take a longer time for capital recovery, said Nghia. However, some project owners are offering their unsold commercial apartments for lease.

Secondary investors also choose apartment leasing as a solution to their financial distress.

Phan Thanh Mai, general secretary of the Vietnam Real Estate Association, said project owners should adjust the function of their construction works in the current tough conditions. Instead of waiting for big revenues from apartment sale, they could earn regular small sums in a longer period.

Statistics in the past three years show that condo-for-rent projects were often 80% occupied, and the demand in this segment remains huge.

Condos for rent and incentives for investors in this housing segment are mentioned in the national housing development strategy. However, people suggested that aside from providing incentives, the State should play the role of a developer of apartment-for-rent projects, whose potentials are said to remain untapped.

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