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Home English News City overflows with serviced apartments

City overflows with serviced apartments

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Real estate experts denied there was a shortage of apartments for rent in the city, following warnings to foreigners by leading real estate corporation CB Richard Ellis (CBRE) that the city was suffering a huge shortage of top-grade apartments.

"I don't know what CBRE based their report on," said deputy director of Minh Long Real Estate Broker Tran Minh Thong. "It is not the case in fact."

According to CBRE research, there are about 3,000 serviced apartments in HCM City. This is far to few when compared with the number of expatriates residing in the city, at about 81,000.

"Expats are grappling to find suitable options," the real estate corporation warned.

CBRE also found the rental on serviced apartments was increasing. Rent for top-grade serviced apartments is at nearly US$50 per square metre a month.

Savills Viet Nam, meanwhile, forecast the number of rental apartments will increase sharply in the remaining months of this year and next year. The numbers of Apartments will stabilize during 2010-2011 and rentals will fall to less than $30 per square metre a month.

Thong said that during the past four months, serviced apartments were available in large numbers in the city's district 7.

Although the rental of some serviced apartments at the Phu My Hung residential complex had decreased to $800 from $1,000 per month, land owners still found it hard to rent them out, he added.

General Director of Phuc Duc Real Estate Company Lam Van Chuc said the city would provide over 10,000 serviced apartments in the coming time. Most of them will be suitable for rent by expats.

Another real estate company director, who asked not to be named, said CBRE's warning on the shortage of serviced apartments had diverged from reality. He explained that many land owners had rented their houses to foreigners because they could not sell them.

There is concern in real estate circles that the apartment rental market will suffer if CBRE's warnings about a huge shortage of serviced apartments became widespread.

Real estate broker Pham Minh Thao said many customers had voiced their concerns increasing rents for serviced apartments in the time to come.

Earlier, land owners told their customers to increase rentals when drafting new contracts.

Thao pointed out that the situation was at odds with the excessive supply of serviced apartments in districts 2,7 and Binh Thanh District.

According to Thao, there is a shortage of serviced apartments only in the city centre.

"Only between 5 percent and 10 percent of customers want to rent top grade apartments at $3,000-$4,000 a month," said a real estate broker deputy director.

Be careful

Real estate specialists attributed last year's falsified rent rises for top-grade apartments on foreign real estate corporations' declaration that there was a shortage.

While it is still not clear why CBRE released the information about a huge shortage of serviced apartments, the Viet Nam Real Estate Association has affirmed that "actually there is no shortage of top-grade rental apartments in HCM City".

The media has already warned investors and speculators that the real estate corporation was shifting its direction from building offices for rent to serviced apartments. The corporation also has many top-grade apartments.

"CBRE and Savills Vietnam act as brokers in the real estate market, providing mostly management services," said Nguyen Anh Tu, Chief of the Vi£t Nam Real Estate Association Office.

Already real estate specialists recommended people to heighten vigilance over the warnings of a shortage, and other information on speculation in real estate properties.

Such information came from different sources and was released whenever real estate speculators wanted to 're-heat' the market over the past six months of this year.

Specialists recommend those looking to rent apartments should be aware that the rental apartment market was currently sluggish and customers also had to be wary of some real estate agents that were involved in speculative activities. Real estate companies involved in these activities were open to risks, such as the threat of having their mortgaged assets claimed by banks during financial difficulties.
 

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