Nguyen Dang Hung has advertised his villa for rent for months but he's yet to catch a bite.
"No one has come to look at the house," said the landlord in Hanoi's desirable Tay Ho District, an area popular with expats in the capital city.
"Only one or two people have asked the rental price via phone, but they did not contact me again," Hung said, cleaning moss off the white walls of the villa, which he usually rents to foreigners.
"And foreign tenants these days only sign three or six month contracts. So, the time that the house is rented is even shorter than its vacancy."
Stories similar to Hung's can be found across the city.
Many villas on the streets of Xuan Dieu, To Ngoc Van and Nghi Tam, and apartments in the My Dinh and Trung Hoa Nhan Chinh areas are vacant and no one is enquiring about rentals or leases with local landlords.
When foreign investment inflows began increasing in Vietnam a decade ago, many companies and individual landowners constructed villas and purchased apartments in high-end buildings to rent to the swath of foreigners coming to work here.
Hundreds of such villas were built around Hanoi's West Lake area with the sole purpose of renting to foreigners.
Nguyen Dang Vinh, director of real estate company Megaland, said the number of foreign customers renting houses in Vietnam has dropped sharply during the economic recession as many international firms halt expansion and investment in Vietnam. "The number of foreign customers looking to rent houses and apartments with our company is 50 percent less than the same period last year, although many owners have reduced their rents."
Villas in Tay Ho District, which used to be attractive to foreign customers because of its convenient location and reputation for safety, have now become unmarketable, he said.
"Despite rent reductions of some 30 percent over last year, foreign customers are not interested in luxurious villas," he said. "Amid high inflation, they are seeking apartments with more reasonable prices."
A 100-square meter apartment in the luxurious Keangnam building used to rent for US$1,300 per month, but now the rent is only $1,000, Vinh said, adding that even at the reduced price it was difficult to attract renters.
Villas in the districts of Tay Ho, Ba Dinh and Hoan Kiem are leased mostly by European and American families with monthly rents of $1,500 upwards. Meanwhile, tenants from Japan, South Korea and Southeast Asia rent apartments in new buildings in the areas of Trung Hoa Nhan Chinh, My Dinh, and Lang Ha. "Most of them are looking for apartments with rents of $700-1,000 each month," Vinh said.
Nguyen Trung Kien from real estate agency Century said he had a few new foreign clients. Many others are those who have already rented houses in Vietnam, and are seeking new ones.
"Most new customers are foreign tourists who want to lease houses and apartments with monthly rents of $300-400 for one or two months only," he said.
And what's worse is that while demand drops, supply increases, Kien said. "Since August, many people have asked us to help them find customers to rent their houses. However, only two or three transactions have gone through successfully each month."
According to a report from consulting firm CB Richard Ellis, average market rents dropped by 1 percent on the square meter basis and by 2 percent on a unit basis in the second quarter compared to the first quarter. The average vacancy rate for serviced apartments increased to approximately 10 percent, from around 6 percent in the first quarter.
Nguyen Anh Tuan, owner of a villa on Xuan Dieu Street, said many households used to earn enough from renting houses to foreigners to buy more houses, or to send their children abroad for school. However, the situation now is very different, he said.
Tuan said his family borrowed nearly VND3 billion ($144,000) from banks to build the villa with the hope of quickly recouping capital from rent. However, the rent is now not enough to pay the interest.
"Maybe I'll think of selling it to pay the bank loans, and have funds to invest in another business that is more effective," he said.