Introduction

In Ho Chi Minh City (HCMC), the once-lucrative apartment rental market is facing a significant downturn, with yields dropping to levels lower than bank deposit interest rates. This trend has left many investors questioning their property investment strategies.

Case Studies

Tran Hoang Minh Tuan, for instance, purchased an apartment in Binh Thanh District for VND7.2 billion, renting it out for VND18 million per month, yielding a mere 3%. Similarly, Viet Quoc, a real estate investor in District 3, has seen his rental yields drop from 7-8% to less than 3.5% for apartments bought post-2022. Phuong Lan's investment in a VND1.9 billion apartment in Thu Duc City yields a paltry VND6 million per month.

Market Trends

Data from real estate trading platform Batdongsan indicates a drop in rental yields from 4.6% last year to 3.8-4% this year. In comparison, yields in Indonesia, Thailand, the Philippines, and Malaysia range from 5% to 6%. The widening gap between rents and prices has made apartment rentals a less attractive investment, with apartment prices in HCMC increasing by 17% this year, while rents have only risen by 3-10%.

Expert Insights

Dinh Minh Tuan, southern regional director of Batdongsan, notes that over the last five years, apartment prices in the country have increased by 59%, while monthly rents have only risen by 10-15%. Duong Thanh Ha, sales director at Realty Home, observes that more than 70% of apartments for rent in HCMC are temporary businesses, with owners renting out their properties to cover maintenance costs while waiting to sell once the market picks up.

Conclusion

Despite the current challenges, experts suggest that apartments may still be a profitable investment for those planning to sell eventually. Tuan of Batdongsan highlights that the total return on apartments, when factoring in both price appreciation and rents, is currently 12.5-17% a year, making it an appealing option for those looking to build assets while earning rental incomes on the side.