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Oversupply of offices for lease warned
The demand for offices to rent will increase in 2010 when Vietnam’s economy shows positive signs of recovery, but the supply will rise even more sharply, creating a possible oversupply of offices.
Over the next four years, some 100 projects will provide Vietnam with an additional 1.5 million square metres of offices for lease. In 2010 alone, 170,000 square metres will be added, which, experts believe, may lead to an oversupply.
Hanoi, HCM City: Price down, supply up
According to Cushman & Wakefield, HCM City is the city where office rents have decreased most sharply in all of Asia. In early 2010, the rent of center city offices dropped by 53 percent in comparison with the same period of 2009. Many newly-built buildings have not been fully occupied, while others are poised to become operational in the near future, including Bitexco Finance Tower.
Signs of oversupply have become clearer in Hanoi, where office leasing fees dropped by 20-25 percent in 2009. Meanwhile, many office projects will be opened this year.
For instance, Keangnam Landmark Tower in My Dinh, begun in August 2007 with investment capital of $1.05 billion, is scheduled to be completed in October 2010, making a large volume of offices available.
Another large My Dinh office project is Crown Office, part of the Crown Plaza hotel-office-apartment complex, which is scheduled to become operational in April 2010.
According to Savills Vietnam, a real estate service provider, in the fourth quarter of 2009, the total supply of offices for rent in Hanoi was 600,000 square metres, an increase of 23 percent over the third quarter. The new offices provided about 18 percent of the total supply. Meanwhile, leasing capacity weakened, down by two percent from the third quarter: A-class office leasing capacity decreased by 18 percent, B-class one percent, and C class 10 percent.
Low occupancy rates in other areas
Savills Vietnam asserts that the market of offices for rent has developed well, the result of the impressive economic growth and a favourable investment environment.
In the fourth quarter of 2009, Da Nang had 19 high-rise office buildings with a total area of 62,500 square metres. The office rent in Da Nang hovers around $5-17 per square metre per month, a slight decrease in comparison with the third quarter. The highest rental rates belonged to large buildings such as Indochina Riverside Tower and Da Nang Software Park at $17 per square metre. In the fourth quarter of 2009, 69 percent of the offices were occupied, a light increase of 13 percent.
In Binh Duong, by February 2010, four new buildings increased the available area to 1,670 square metres, raising the total number of high-rises to six with a total area of 3520 square metres. The average leasing fee is $10 per square metre per month, but the occupation rate is only 47 percent.
There are only three office buildings in Nha Trang, totaling 5275 square metres. The average fee is $13 per square metres per month and leasing capacity in February 2010 decreased sharply from the previous month, down to 79 percent from 91 percent.
Also according to Savills, in 2010 and the following years, the supply will expand, leasing fees will lower and investors will have to re-consider their deals in the market. Meanwhile, clients will also become more astute as they realize that they have many choices.
VietNamNet, DTCK
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