Business premises on ‘golden land’ left vacant during Covid-19
Many business premises closed in the center of District 1, despite how busy they used to be before.
In VnExpress’s survey, in mid-July, many shop-houses (mostly 2-3 storeys) are located on the core streets of District 1, Ho Chi Minh City in the state of vacancy, stocked with full of phone numbers for sale and for rent.
The central core axis with Nguyen Hue walking street, Dong Khoi commercial street, Ngo Duc Ke milk tea street, Ham Nghi office street… all filled with many vacant shop-houses, only trolleys and small carts gathering around or sparse people.
In fact, in the past 6 months, vacant business premises are becoming popular in the most favorable commercial streets in Saigon. From the first quarter, the business situation was sluggish, lasted until the second quarter and there was no sign of improvement in the beginning of the third quarter, resulting in an increase in the number of vacant space despite the prime location in the central area. Even the dental clinics, spas, travel companies… also closed and terminated the lease in the difficult period due to the impact of Covid-19.
Shop-houses for rent on Ngo Duc Ke street, near Ho Tung Mau, District 1, HCMC on July 22. Photo: Trung Tin
Mr. Binh, a broker in District 1, has nearly ten years of experience in the city center market of HCMC said, in the past 10 years, this is the most severe crisis period of the shop-houses rental market. The owners of the shop-houses no longer can enjoy the time that there were customers lining up for rent.
Instead, the owners face the current wave of cost cutting and lease termination. At the same time, the rental has also sharply adjusted for months, but there are still less tenants due to the low need to seek business premises in the low season.
Mr. Binh said he witnessed a dental system shut down entire clinics. All are located in prime locations in the city center due to sluggish business and no prospects of early recovery.
Savills’s latest commercial real estate market report said, the pandemic caused many tenants renting prime business premises face difficulties. Many dining, fashion chains and services in prime locations have to close.
Shop-houses for sale or for rent on Ngo Duc Ke street, near Nguyen Hue walking street, District 1, HCMC on July 22nd. Photo: Trung Tin
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According to Savills, the shop-houses in the central area of Saigon depends on the fields such as commerce and tourism have been terminated due to the severe impact of travel restrictions between countries. Potential tenants are looking for incentives to reduce rental rates up to 40% (whereas, end of last year, the decrease is only maximum of 20%). According to CBRE’s survey, retail space rentals in Ho Chi Minh City decreased 10-20% compared to before the outbreak. Also, the lease is shorter, reduced to 2-3 years instead of 5 years. Many retailers postponed the opening of new premises, extending the vacancy time. Mr. Nguyen Loc Hanh, General Director of Ngoc Chau A Real Estate Investment Joint Stock Company, said that there are many reasons for the business premises being vacant in the city center. Firstly, the rental in this area has been pushed up too high, surpassing the tenure threshold of tenants. The current vacant status of business premises on golden land in Ho Chi Minh City is as a result of the continuous rental increase in a long time. Secondly, the purchasing power decreased and the business declined. Although with lower rentals and shortened lease, if the business is not profitable, it can easily cause tenants to terminate the premises to cut loss. Thirdly, it depends a lot on international visitors. Business premises in the CBD often sell high-end products, targeting international customers. Mr. Hanh affirms that the absence of international tourists because of the lock down has contributed to weaken business, trade and service activities in the city center. Fourth, the psychology of waiting for a safe point, temporarily narrowing the business until the global epidemic is under control. In addition, a surge in online business in the pandemic is changing the demand for shop-houses. The current situation is that if tenants still can maintain the flow, they can choose the plan of narrowing the scale and returning ineffective premises to save costs. Mr. Hanh assesses that the situation of series of vacant business premises on gold land could continue until the end of 2020. |
This is the image of Old Quarter (Pho Co), many shop-houses closed because of Covid 19
Around Hoan Kiem area, Ha Noi, many hotels have been closed since the beginning of Covid epidemic and there has been no sign of re-operation. In many other places, there are many hanging signs for renting/selling premises.
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