Finding your dream house can be troublesome in Ho Chi Minh City and even if you do manage it, there are no guarantees you will be able to hang onto it.
The long way home “I couldn’t believe that it would take me two months to find a house to rent here,” says Ronny Grant, sitting over a glass of ca phe sua da (iced coffee with condensed milk) on Han Thuyen street in Ho Chi Minh City. When Grant first came to Ho Chi Minh City he crashed in a hotel, but he soon tired of living out of one room and decided to look for a place to call his own.
His colleagues advised him to contact a few real estate agents and let them do the hard yards on the house hunting. All he had to do is take a look at the leading contenders, make his choice and it would be home sweet home. Well, not quite. “One agent showed me a house in Phu Nhuan district at a very tempting price: $300/month for the property,” says Grant.
“But it turned out the house doesn’t have an air-conditioner and the landlord insisted if I wanted to take the house, I should equip the air-con myself. It was so unreasonable because the house was not very well-furnished either!” In another case, Grant was grilled about his personal life, his job and even about his family back home in Ireland by a suspicious landlord.
Of course, no one should expect to instantly find their dream house in their favourite area of Ho Chi Minh City with the perfect landlord, but there’s no doubt that in a city with sky rocketing rent searching for a home can be a frustrating business. In the end Grant went on a solo mission and after two months he eventually found his reward in a cosy two-room apartment in District 1 for a decent price of $500. “The search can be tiring but it would have been worse to stay in a hotel as I don’t feel at home there.
I needed space to feel human again,” says Grant. “You have to be very patient and never give up!” But even after the long hard search, sometimes there are sometimes no guarantees. Another NGO worker, Peter Adams spent a month searching for a house for his wife and family and settled happily into a comfortable abode in An Phu district, then a month later while on a business trip he received a text message from the landlord to inform him he had to leave in under a month.
“I looked into it but there was nothing I could do, the lease was too vague,” says Adams. “What made matters worse was because I was away I couldn’t look for a new house.” According to Thao Rogers, Managing Director of Saigon Properties, who has gained the trust of customers and clients thanks to her company’s quality services over the last 11 years, demand for houses for rent from foreigners has increased steadily through the years as more foreign companies and organisations set up shop in the southern hub.
However based on the current high rate of construction, Thao is not quite sure that the supply will ever meet demand. “With building projects springing up everywhere in the city and with people buying houses to lease them out right after the deal is sealed, there are plenty of houses for foreigners to rent,” she says So the problem isn’t availability, the problem is style.
The simple fact is many houses don’t meet expatriates’ tastes, according to Rogers. “It is very hard for us to find a house with a charm that can attract our customers right away,” she says. As demand for luxurious housing rises so too does the price. Currently demand for serviced apartments ranging from $6,000 to $8,000 is increasing and customers looking for luxury apartments may have to wait for two years to get what they want.
Hundreds of would be investors desperate to get a slice of the property pie are willing to queue up for days as witnessed during the initial sales for the Vista property project in District 2 and Hoang Anh Riverview in Ho Chi Minh CIty. According to Rogers, rental prices in Tan Binh, Binh Thanh, Phu Nhuan district have increased by at least 50 per cent over the past few years. In certain cases rental prices have doubled in highly popular areas such as District 1, District 3, An Phu area in District 2 and Saigon South.
“Together with the increase in land prices and construction expenses, many investors have decided to increase the price to meet up with their investment,” adds Rogers. There will be a number of major building projects completed by 2012, but of course, no one can be sure of what the demand will be by then. “Many companies have increased their accommodation budgets to match up with the inflation rate and it’s not too difficult for the property owners to find this out,” says Rogers. “If the customers are not willing to pay a higher price, property owners may need to pause for a second thought. The key here is who can be a better negotiator.”
Current Availability Currently there are around 3,000 serviced apartments in Ho Chi Minh City, most of which are occupied, and there are no new projects slated to open in 2008. This means prices at established branded units will rise to $40-$45 per square metre. Villas in District 2 are also hot property with monthly rents ranging from $1,000 to $5,000. Meanwhile new serviced apartments such as Sherwood and Lancaster are priced from $2,300 to $4,700 a month.
The residential-for-sale-market is now providing more units under buy-to-let schemes. It is this section of the market that is supplying housing to incoming expats but also helping to fuel sales of residential units. With capital values increasing, and rental rates remaining high, this is becoming a popular method of holding wealth. Reading the small print All lessees need to consider all the terms in a contract carefully, as even experienced lessees run into problems and one small disagreement can lead to a falling out.
“When I saw the apartment in My Phuoc Building, I really liked it and paid a deposit of $300 for the landlord,” says Ian Kitching. “I didn’t notice there was a cabinet in the kitchen which doesn’t go with any other furniture. I told the landlord to move it out the following day but he didn’t do it. He told me if I didn’t like the house I could break the contract but I would not get my deposit back.”
The cabinet remains in the middle of Ian’s kitchen. “Some landlords will tell you the contract doesn’t need to be notarized by authorities because the leasing price can be subtracted from the property-leasing tax and it’s too troublesome to deal with the paper work,” says Phan Thi Thu Ha, Ian’s wife. “But if you agree to that, you put yourself at risk of not getting your deposit back as well as getting kicked out without warning.”
Usually, the property owner is supposed to pay leasing tax and commission to the real estate agent, but it is always advisable to make sure all sides are reading from the same page. There is one term in the leasing contract that will state the property owner can take his property back as long as he gives a month’s notice.
That puts the lessee under pressure as it may very well take longer to find a suitable house to move into. “You should try to fix anything you damaged while you rented the house as well as the landlord can surprise you with a bill for fixing the furniture, repainting the walls or cleaning up stains, before you intend to move out,” adds Thu Ha.
“Many property owners are not supportive at all so you have to make sure you express upfront what you want and what you need,” admits Roger. “Through my years of giving constancy to both customers and clients, I have learnt that around 80 per cent of the guys in this business are honest.”