HCM City shop owners desperate to sell as tenants’ business hit by pandemic, quit

10:48 | 12/04/2020 Society

Lack of business due to the COVID-19 pandemic and continuing pressure from interest on bank loans are forcing many shop owners in HCM City into a sell-off.

hcm city shop owners desperate to sell as tenants business hit by pandemic quit
A shop in District 1 that is advertised to be sold at good price. -- VNS Photo

Even in downtown Districts 1 and 3, boards announcing shops for sale can be seen every dozen metres.

Business website cafef.vn reported that since the beginning of March many tenants have closed down their business and returned their shops to owners. Some have tried to continue and sought rent relief.

Online real estate sites too advertise shops for sale on attractive terms.

Property brokers said people were seeking to reduce the lease price or sell outright mainly because they are not able to cope with the bank interest burden.

“They cannot pay the interest because of the business situation,” one broker told Viet Nam News.

She said one person wanted to sell more than 10 shops on a busy road in District 1, but “it is difficult for him to sell at that moment.”

A shop owner told cafef.vn: “Most owners need money to pay the bank. The money they get from tenants is not even enough to pay the interest. At the moment the most important thing is protect our principal.”

The entire retail market is facing a huge challenge due to the pandemic, with a report from market research company CBRE Vietnam saying it is one of the sectors “most affected by COVID-19.”

In a report it said in the first quarter revenues for the food and beverages and accommodation and tourism sectors fell by 9.6 per cent and 27.8 per cent year-on-year.

Footfall in shopping centres started decreasing in February and plummeted by 80 per cent in March, it said.

According to retail analysts at CBRE, the decrease in revenues varied by category, with those sectors forced to shut down like education having no revenues and F&B, fashion and accessories and entertainment seeing revenue plunge by 50-80 per cent.

Some mall tenants have temporarily closed but no pre-mature lease termination has been reported thanks to rent support from landlords.

Most shopping mall owners in HCM City have cut rents by 10-30 per cent since March, with a few starting as early as in February.

Those forced to shut have even been offered discounts of 50 per cent .

At the end of the first quarter rentals for ground and first floor space in the central business district and non-CBD areas were down 11.4 per cent and 15.9 per cent quarter-on-quarter. For higher floors, the reduction is steeper.

Compared to last year rentals in the CBD and non-CBD areas are down 6.6 per cent and 17.6 per cent.

Thanks to the reasonable landlords, occupancy rates are almost unchanged despite the pandemic. The vacancy rate is the same in the CBD while it increased by 0.9 percentage points in non-CBD areas.

Theo VNS