Waiting For The Train

After a brief flurry, Vientiane’s rental market has sunk back into a familiar torpor. But the arrival of a long-anticipated rail link between the Lao capital and southern China may alter the dynamics of the sector.

- Steve Finch

Coconut trees fringe a secluded five-bedroom villa on the outskirts of Vientiane, a kilometre from the gold stupa of That Luang. The price? A snip at USD1,200 per month, a 20 percent price drop compared to a year earlier when this two-level villa rented for USD1,500.

Vientiane has transformed into a buyer’s market almost overnight: landlords readily volunteering discounts and villas laying vacant across the tiny Southeast Asian capital. After years of steady price growth, Vientiane’s rental market has suddenly fallen off a cliff.

At the end of 2018, Hong Kong-based New Asia Property published a residential market update on Vientiane, noting prices had plunged as much as 30 percent in a year. Yet the property slump in Laos has largely gone unnoticed.

International real estate agents Colliers and Savills have released reports on Laos intermittently over the past decade, but in recent years have shifted their attention to more dynamic markets in the region, particularly Yangon.

Last year, the opening of Laos’ largest high-end residential property—the Landmark Diplomatic Residential Compound (DRC) overlooking the Mekong River—tipped Vientiane into massive oversupply, a sign of just how small the market remains, according to New Asia Property.

The grand opening of the Landmark DRC has sent the total number of apartments for lease in the capital soaring by almost 45 percent from over 500 units in early 2017 to a still small, but much expanded, 850-plus by the end of last year. In less than four years, Vientiane’s stock of apartments for lease has nearly tripled.

“That takes a lot of time to absorb in this sort of market, unless the market itself is booming,” says Tony Picon, managing director of New Asia Property.