Office rents tumble in first quarter

Tuoi Tre

Office rents in Ho Chi Minh City fell as much as 20 percent in the first quarter, as new office buildings became available in a disinterested market, according to the latest report from real estate services provider CB Richard Ellis (CBRE) Vietnam.

The average rent on Grade A offices in HCMC in the first quarter was US$57.30 per square meter, 20 percent lower than at the end of 2008, CBRE said in its quarterly report.

Rents on high-end offices, which were as high as $100 a square meter last year, could slump to as low as $30 a meter by the end of this year, according to some forecasts, the CBRE report said.

Some 13 new office buildings have come on the market since the beginning of this year, offering an additional 78,000 square meters of office rental space. As a result, the office vacancy rate rose to 12.3 percent.

An additional 200,000 square meters of office space is due to hit the market by next year.

Rents for offices in Grade B buildings fell 15 percent during the period, while Grade C office rents fell 16 percent. CBRE said the number of new office rental contracts signed in the first quarter was 85 percent lower than in the first quarter of last year.

Many office tenants were moving out of Grade A buildings into Grade B buildings to try to cut down on costs and keep their businesses going through the global economic downturn, CBRE Managing Director Marc Townsend told a press conference in HCMC last week.

In the smaller office rental market in Hanoi, Grade A office rents dropped 8 percent to $49 per square meter from the end of last year to the end of the first quarter.

CBRE said Hanoi may have an additional 100,000 square meters of Grade A office space this year.

Serviced apartment rents in HCMC also followed the same trend. In the first quarter Grade A rents declined by 4 percent from the last quarter and CBRE forecast rents would fall a further 8 percent to 10 percent this year.

New apartment projects, including Kumho Asiana Plaza in the city’s center and The Crescent in Phu My Hung urban zone, are expected to begin advertising for tenants soon.

CBRE said the serviced apartment rental market was likely to be further depressed as multinationals replaced expatriate staff with families in Vietnam with young single employees.

Source: Tuoi Tre

• Deputy PM welcomes US giants -17/05/2009
• No shortage of US dollars: deputy governor of State Bank -17/05/2009
• Exchanging rice for cashew nuts proposed -17/05/2009
• Gold price reaches all-time high -17/05/2009
• Cargo costs blow out as ships stranded -17/05/2009

• Delayed highway project gets cash injection -17/05/2009
• London cabs will promote images of Vietnam through the dreary U.K -17/05/2009
• National Assembly approves tax exemption -17/05/2009
• Housing market remains gloomy -08/05/2009
• NA may adjust economic targets -08/05/2009