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A-grade office leasing fee may drop to $30/sq m
Real estate consultancy and service firms Cushman & Wakefield, Savills and CBRE all have given predictions that office leasing fees in HCM City will drop further in the time to come.
Cushman & Wakefield has predicted that the A-grade office leasing fee may drop to $30/sq m this year, not including management fees and VAT. This means that the leasing fee will drop by 50%, and become equal to the leasing fee levels in other Southeast Asian countries like Thailand, Malaysia and Singapore.
The prediction was given after the results of a survey on office leasing fees in Q4 2008 in the city were released. During the time of the survey, the leasing fee for offices in the central area of HCM City was $40/sq m/month, while the fee was $30/sq m for offices in nearby areas. Meanwhile, an office building located on the route linking to the airport in Tan Binh district had the leasing fee of $24/sq m, and clients only had to pay $20/sq m to lease offices in areas near the airport.
The survey also shows that the areas farther from the centre of the city had lower leasing fees. For example, offices in Van Thanh area could be leased for $20/sq m, and in Phu My Hung $24/sq m. The office towers in the area around the Phu Tho racecourse in districts 10 and 11 had the leasing fee of $17/sq m only.
The decreasing office leasing fees can be explained by the global economic crisis, which has forced clients to tighten their budgets and cut expenses.
Savills real estate consultancy group has also released a report which predicts that the A-grade office leasing fee may drop to $30-35/sq m this year. Prior to that, CBRE said that office leasing fees had decreased by 30% from last year.
Local newspapers have reported that the leasing fees of offices far from the city’s centre are now hovering around $10-15/sq m a month. A-grade offices on Nguyen Hue road now have the leasing fee of $60/sq m a month, while B-grade offices $27-30/sq m. There are a lot of idle houses which have been re-designed to function as offices, and are now being leased at $15-25/sq m only, a slight decrease over the beginning of 2009.
While new office buildings are facing a lack of clients, several A-grade office towers in the central area remain ‘calm’ because they signed long-term leases with big clients. Moreover, the office buildings are located in advantageous positions, have strong brand names and provide professional services.
A company which moved its office from the Rex Hotel on Le Loi street in district 1 to set up an office at Sunwah on Nguyen Hue in early Q2 2008, said that at that time, it had to sign a contract with the leasing fee of $75/sq m a month. After that, the market leasing fee dropped by 30%, but the company could not re-negotiate the leasing fee because the contract is valid for two years.
VietNamNet/VNE
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