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Property market down, but office leasing fees still up
Some analysts say that the supply of offices, expected to increase in the time to come, will force office leasing fees down, while some others believe that the supply will not be profuse as investors are facing a lot of difficulties executing projects.
A-class office leasing fees have been increasing steadily since the end of 2007 in HCM City. As a result, a lot of businesses have had to choose offices in the suburbs of the city instead of ones in beautiful positions.
Leasing fees keep rising
According to VietRees, a real estate consultancy firm in HCM City, the leasing fees of A-class offices in the city have been increasing by $5/sq m on average every two months since the end of 2007. Contracts on leasing offices at Saigon Trade Centre were signed at the end of 2007 at a little over $50/sq m, while the leasing fee has soared to $70/sq m now.
The owner of Diamond Plaza is now leasing at $80/sq m/month, while Lac Viet Joint Stock Company is leasing high-grade offices on 12-12A floor at PetroVietnam Tower at $100/sq m/month.
Though the leasing fees have been pushed up to overly high prices, companies still have to accept the high levels because they find it hard to find other offices in beautiful positions to lease. Meanwhile, a lot of businesses are queuing, waiting for opportunities to jump in to replace businesses which want to relocate their offices.
Offices in suburbs, the good choice
The business director of an import-export company with headquarters in district 1 said that the company is just keeping the office in the centre of the city for the secretariat division, while it is planning to lease another place in the suburbs of the city for other divisions of the company in order to cut expenses.
Meanwhile, other companies have longer-term plans like investing in houses on streets with the usage space of 200-400 sq m, located on 3-5m-wide streets in the golden area of the city. However, this solution can be implemented only by the companies with healthy financial capability, mostly foreign-invested. Domestic companies, with their light pocketbooks, only dream of offices in more distant districts like districts 4, 7, Binh Thanh and Tan Binh.
Supply will exceed demand?
It is expected that by the end of 2009, many offices and trade centres will put into operation in the city, including Vietcombank Town 77,000 sq m, Financial Town 100,000 sq m, and Kumho Town 32,000 sq m in district 1, Centec Town 25,000 sq m in district 3, which is thought will help ease the market’s thirst for offices.
However, experts say that office leasing fees will remain high for some more time. Duong Chi Thien, Deputy General Director of 584.6 Investment and Real Estate Company, said that it is too early to say that the market will soon be saturated.
He said that the investors of several projects are facing big difficulties in land fund, site clearance, and in dealing with the skyrocketing prices.
He stressed that the new supply of offices in the time to come would only partially ease the current serious shortage of offices, not force prices down, until at least the end of 2009.
VNN
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