Apartment rental prices continue to increase

Thien Minh has just moved into a new apartment in District 7, with a monthly bank payment lower than his previous rent. That is also the motivation for him to take advantage of low interest rates to buy a house, while rents continue to climb.

"Last year, I paid 19.5 million VND per month in rent for a 3-bedroom, 96-square-meter apartment. At the beginning of this year, the landlord increased it to 22 million VND," Minh said. The apartment he mentioned is located in a project at the corner of Mai Chi Tho - Dong Van Cong Street, Thu Duc City.

Hoang Phuc, a broker, said that rental prices in the mid-range segment increased by 10-15% compared to the same period last year. "While apartment prices decreased, rental prices increased, concentrated in high-end apartments or those in good, central locations," he said.

According to data from online real estate platform Nha Tot, apartment rental prices in more than half of districts in Ho Chi Minh City increased by 4-40% over the past year.

For example, in Thu Duc City, the average rent increased from VND9.2 million to VND10.3 million per month, equivalent to 12.4%. Similarly, the rent in District 4 and Phu Nhuan increased by 17-28% compared to the middle of last year, respectively VND13.5 million and VND9.6 million per month.

The report by real estate services firm JLL also assessed the apartment rental market in Ho Chi Minh City in an upward cycle. In the first three months of the year, rents increased by 1.6% quarter-on-quarter and 5.9% year-on-year, reaching an average of US$10 per square meter per month. This movement was recorded in new, high-quality projects, while the rest of the market remained stable.

Talk toCNBC, said Mr. Roddy Allan, Director of Research, Asia Pacific, JLL, Ho Chi Minh City, along with Jakarta, Bangkok and Manila, are the four cities with outstanding growth in apartment rental prices in the developing market group. "Ho Chi Minh City is one of the best performing markets in the region from a residential real estate perspective," he said.

Low supply has led to a steady increase in rental prices in this segment. In the first quarter, about 500 apartments were offered for sale in Ho Chi Minh City, according to CBRE. Most of these were projects that were offered for sale last year. This is also the lowest number of apartments for sale in a quarter in the past 15 years in Ho Chi Minh City and equal to 17% compared to the same period last year.

However, "luxury" projects are still favored by young people with good incomes. "The demand for living space is changing, especially among young people. They can spend 20-30 million VND per month to rent a comfortable apartment, instead of buying one," said Hoang Phuc.