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Office rental rates decrease further
Hanoi office rental fees decreased by 3.6 percent in the first quarter of 2010 over the fourth quarter of 2009 to $27 per square meter. At the same time, however, office occupancy rates have risen.
According to Savills Vietnam, a real estate consultancy service provider, the occupancy rate in the first quarter was 85 percent, a slight increase of two percent over the previous quarter and the same increase with the growth rate in the third quarter of 2009.
Though the office occupancy rate has improved, office rent in all classes decreased by 3.6 percent on average compared to the fourth quarter of 2009.
The number of A class offices leased in the first quarter did not see any significant increase, but leased B class offices decreased by a half. Only C class offices saw good results.
A lot of A class buildings such as Pacific Place and Sun City, which rented at $60-65, are now $42-50 per square meter. Capital Tower initially rented at $55-60, but the owner now offers spaces for $42 per square meter. A building at No. 4 Lang Ha street has dropped its rents from $33 to $25-27, Similarly, Kinh Do Building is now offered at $20-22 per square metre instead of $28-30.
C class offices on Nguyen Phong Sac, Trieu Viet Vuong and Le Dai Hanh, with rents of $7-12 per square metres, have been attracting many clients.
According to Savills, though Vietnam’s national economy has shown signs of recovery since late 2009 and foreign-invested businesses are returning, the demand for leasing offices in the first quarter of 2010 remains low.
Tran Nhu Trung, an executive of Savills Vietnam, believes that the decision on banning apartments to be used as business offices will have an impact in the next quarter, leading to higher demand for C class offices.
According to Trung, rent is expected to further decrease, but may recover in the next 12-16 months. Clients will seek new offices to lease in non-central areas, when center city offices are fully occupied.
Savills calculated that there are some 610,000 square meters of office space for lease in the first quarter of 2010, an increase of 3.5 percent compared to the fourth quarter of 2009. These include 86 offices of A, B and C classes located in across the 10 districts of the city. Two new office buildings in Hanoi, Tourism Tower and Sky City Tower, have added 16,600 square meters.
An oversupply may be inevitable, as it is estimated that an additional 1.9 million square meters of office area from 120 projects will be made available.
vietnamnet, VnExpress
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