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Wetlands Investment CEO Le Huu Dung said that in 2017, besides the traditional real estate investment (real estate), the type of business that leases real estate for lease will grow stronger with twice the profitability rate, even triple the bank interest rate.
According to Mr. Dung, the 3-6 story townhouse model (excluding ground floor) is leased by investors to long-term contracts and then arranged into small and medium sized rooms (25-30-40 sqm) for lease. It has been popular in the last two years. This is the kind of mini office that the start-up companies, scale 3-5 people a favorite office. If the occupancy rate of the mini office is less than 80%, the risk of loss is very high, but if you fill 90-100%, you can get a net profit of 20% or more.
A higher segment of the multi-story townhouse, combined on six floors, can accommodate the larger office space (75-90 and over 100 square meters) of each work space for businesses with medium-sized or over. Estimated number of employees working in these types of offices ranges from 10 to 20 people, often easy to rent and rent higher because most businesses have the stable business. If the occupancy rate is 90-100%, the profit margin of this business model could be 25% or more.
Real estate investment specialist Ho Chi Minh City, Nguyen Hong Hai said, in 2016 on the market has appeared many individuals and organizations tested and successfully operated lease model office building for rent again. The average profit is 10-15%, even a good organizational unit can earn over 20%. Expected in the years 2017-2020 this business model will continue to attract the attention of the investment community.
With buildings larger and more solid than townhouses, the total lease period (before the subleasing arrangement) must be calculated in units of ten years. Occupancy rates are more diversified. 40% of tenants are big names or big names. 30-40% of the next tenants are start-up companies. The remaining 20% is equally divided among banks, design firms, construction companies, and other foreign companies.
Banking clients are listed as sole agents, renting only the ground floor, extended lease. They are willing to pay a premium over the average 150%. Therefore, if there are traditional tenants from the banking group, it is a huge advantage when operating the rental of the building.
Average asking rent for guests is $ 18-25, of which the cost of renting a package of VND 12-15 / sqm, management fee and services for the building of $ 3-5/ sqm, the rest is profit. Having to rent the whole building package, the company’s monthly capital expenditure costs are not small, this is a big challenge. Therefore, want to have a 100% rental interest. If the occupancy rate of 80% is just break even.
Mr. Hai estimates that the office leasing market is still promising in the coming years due to Vietnam’s deep integration with the region and the world. Therefore, the rental model is still extremely attractive. The advantage of renting a building and then renting it out is that the investor does not lose land, construction costs or shorten construction time.
General Director of Phu Vinh Investment Consultant Joint Stock Company, Phan Cong Chanh, said that the model of investment in luxury apartments for lease in big cities was popular with the real estate business in 3-5 years. There is still room for growth in the next half decade.
Currently, the largest high-class motels in HCMC’s urban districts: 1, 3, 5, 10, 11, Tan Binh, Phu Nhuan and Binh Thanh. In new urban areas such as District 2, 7, high-grade rental space includes: renting for Vietnamese (VND 3-5 million / month) and renting to foreigners (VND 5-10 million / month).
Typical room for rent is 15-20 sqm, near the center, the price is VND 3.5-4.5 million /room/ month or more. This is twice the cost of a low-budget room (less than VND 2 million / room/month) but half the price of a smaller apartment. Compensation of the location of the high-grade room for rent is quite convenient, connecting to the central area fast, good service.
In this form of business, individual investors rent houses near the alley in the city and arrange space for rent. Instead of investing the land from the land, they only rent, then arrange for sublease according to their own process. This option has the advantage of having less initial capital, thus recovering capital faster than direct investment from A to Z (buying land, building houses, leasing operations).
The challenge of this option is to find supplies (rooms) and have large demand (rent). It may be necessary to invest in more furniture but this money is partly recovered from the deposit of the customer. Yearly rents / total investment value is about 40% per year. The rate of filling 70-80% break even, filling 85-100% profit. Average monthly profit depending on how the management can reach 2-3% per month. Estimated operating well, profit over 25% per year.
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