There have been no signs of the recovery of the office leasing market in the capital city, while real estate consultancy firms think that office leasing fees will continue to decrease in the time to come.

The global economic crisis has heavily influenced the office leasing market. According to Cenvalue, a real estate valuation firm, the average office leasing fee in the first months of 2009 decreased by 11 percent, or $4 per square metre per month, over the end of 2008. The occupancy rate of office buildings in central areas dropped to 91 percent, or three percent lower than in the fourth quarter of 2008.

Other real estate firms also said that A-class office leasing fees decreased in the first quarter of 2009 by eight percent, which was expected, over the end of 2008 to $49 per square metre, nearly equal to the price of the first quarter of 2008. By the end of the first quarter of 2009, the percentage of unoccupied A-class offices had increased by 2.6 percent. The occupancy rate of these offices decreased in the subsequent months.

B-class office leasing fees dropped to $33 per square metre in the first half of 2009, a decrease of five percent from the same period of 2008. The occupancy rate of B-class offices is now about 81 percent, mostly seen at newly operational buildings, while the occupancy rate of old buildings is 92 percent.

The office leasing fees in the city are tending to decrease further as investors are competing fiercely with each other to attract big clients.

According to Cenvalue, though the current leasing fee is now relatively low, the more important thing for investors is to try to obtain a high occupancy rate, as they know that there will be 100,000 square metres of B-class offices and 130,000 sq.m of A-class offices put into operation this year.

Pham Thanh Hung, General Director of Cenvalue, said that both domestic and foreign companies now have to consider thoroughly their plans to set up offices or expand business. Hung said that if Hanoi wants to attract more foreign enterprises to open offices or branches, it needs to have more competitive office leasing fees in comparison with other office leasing centres in the region. He said that the office leasing fees in Shanghai, Bangkok, Seoul and Kuala Lumpur are lower than those in Hanoi.

The real estate consultancy firm has forecast that 1.1 million square metres of offices for lease will be put on the market by the end of 2012. Of this amount, more than 190,000 square metres will be available by the end of 2009 and 400,000 will be added in 2010.

(vietnamnet, vneconomy)

Commercial real estate prices plunged in Ha Noi during the second quarter of the year, according to a report from property consulting firm CBRE Viet Nam.

Commercial real estate prices plunged in Ha Noi during the second quarter of the year, according to a report from property consulting firm CBRE Viet Nam.

The firm cited declines in both exports and raw material and equipment imports as an indicator of slower industrial growth that is likely to last for a few more quarters as factors having a direct impact on the amount of capital being poured into the real estate market.

The trend could be most clearly seen in the office rental market, it said.

During the second quarter, rents of Grade A office space fell by 5.6 per cent to an average of US$46/sq.m, while those of Grade B office space dropped by 19.1 per cent to $26.

“The drop in Grade B rents comes from the reduced rents of buildings launched in 2009 which, when excluded, leaves only a 7.7 per cent drop in rents for stabilised grade B buildings,” the CBRE said.

Grade B vacancies also rose from 5 per cent during the same quarter a year ago to 22.1 per cent this past quarter, even though only one new Grade B building, Plaschem Plaza, appeared on the market. Grade A buildings, meanwhile, saw a 2.84 per cent rise in vacancies.

Rents for retail space in shopping centres also dropped during the second quarter. Average rents stood at around $54/sq.m with ground-floor rents at about $90. Rents outside the central business districts dropped by 5 per cent to $34/sq.m.

The trend for many retailers was to lease a shop on a street, not in a shopping centre, said CBRE managing director Marc Townsend, and shopping centres outside the central business districts were having a hard time maintaining tenants.

“While central business district shopping centres remained over 99 per cent occupied, non-business district shopping centre vacancy grew from 33 per cent in the first quarter to 44 per cent in the second quarter,” the CBRE reported.

Serviced apartment and hotels were among the most severely affected last quarter by the global recession as fewer foreign visitors and workers came to the country.

Average rentals for serviced apartments dropped to $28.77/sq.m per month, down 12 per cent from the same quarter a year ago, although the situation in Ha Noi was better than that in HCM City due to a greater number of workers from foreign non-governmental organisations not as strongly affected by the recession, Townsend said.

Hotel occupancy rates were down across-the-board, however. (MONRE)

There was not extra apartment-for-lease supply in Hanoi during the second quarter of 2009 and the apartment leasing price fell 12% compared with the previous quarter.

Hanoi now has nearly 1,900 apartments including 700 belonging to the international management projects and 1,200 managed by private companies.

The average leasing price excluding service fee and VAT reaches about $28.77 per square metre, down $38.84/sqm (12 percent) from March. Particularly, the price declined 15.5 percent as for international projects and $25.13/sqm or 8 percent as for apartment projects of private companies.

The market of service apartment for lease nearly had no movement in Q2 after a surge in Q1 with the vacancy ratio of approximately 11%.(VNRealestateMarket)

A ground-breaking ceremony to build Vien Dong Meridian Towers, the tallest building in central Vietnam, will be held on July 25th in Da Nang city.

The project worth US $180 million is invested by Vien Dong Land Joint Stock Company (Viendong Land), Vien Dong Technology Consultancy and Transfer Joint Stock Company (Vien Dong Corp.), Trung Nam Construction Investment Joint Stock Company ( Trung Nam Group) and Sai Gon Telecommunication Joint Stock Company (Saigon Tel).

At 220 meters high, the tallest tower will have 48 floors, and contain 3 basements. The complex of towers will consist of a high-class trade area, hotel, offices and apartments and a convention center that can accommodate up to 1,500 people with modern equipment and devices.

At this point, all preparations for the construction have been wrapped up and the investors have signed a contract with leading hotel manager ACCOR on the management of the future hotel.

According to officials, smart building technology and energy saving technology will be applied to the construction of the complex.

Especially, an advanced waste processing system will be installed in the complex. It will guarantee that 100 per cent of the waste water will be treated before being discharged into the environment. (vnrealestatemarket)

Marc Townsend, managing director of CB Richard Ellis Co Ltd said the rental of grade A offices for lease has dropped by 5.6% and grade B by 19.1% down.

The main reason for the declining rental price of grade B offices was that many newly constructed office buildings offered low renting price in 2009. In addition, the investors have applied various promotion methods for the old and new lessees.

In the coming time, only BIDV Tower (the grade A tower) will finish the construction work. However, many experts stated that the rental for grade A and grade B offices for lease would continue falling.

Townsend sees no changes in the market of apartments for lease.
The average monthly rental in the market for this type of products has dipped by 12 percent against Q1 of 2009 to $28.77 per square metres, including those projects conducted and managed by foreign and domestic enterprises.

He predicted that the offered price for high-end projects would see a massive decrease, however the supplying source of apartments for lease would retain stable as there are no new project in 2011.

In Q2 of 2009, the Plaschem Plaza, a grade B office building with total surface area of 12,800 square metres has been offered for sales. The market is finding it hard to search for lessees in those projects that have been offered for leasing since the previous projects.

However, since the beginning of this year, the demand for ordinary houses in Hanoi have sharply increased, with large transaction value thanks to the low offered price and the government’s demands stimulating programmes as well as the improved stock markets.

Many domestic investors plan to develop the markets of ordinary houses and medium level houses with much lower construction costs in comparison with those projects conducted by the foreign investors.

The apartment market in the last three months has witnessed a reverse after a long continuous dipping period.

The sales price of high and medium class apartments jumped by 4-5 percent, the ordinary houses up 12 percent, and even 20-30 percent in some specific projects.

Tran Anh Dung, director of Ba Dinh Trading Co Ltd said that the sales price was different among the residential quarters, depending on their location. At present, in Nghia Tan Residential Quarter, there are apartments on floor 3 or 4 with sales price of below 800 million dong.(Vietnam Real Estate Market)

The office market has experienced the greatest fluctuation of any real estate sector in Vietnam and it is predicted to fall even further.

Nathan Cumberlidge, head of Colliers International’s Market Research and Valuation Department, said that in line with Vietnam’s stuttering economy, office rentals in Hanoi had dropped 15 to 20 per cent since the beginning of the year on new deals and lease renewals.

“The market’s recovery is predicted to last until early 2010. However, the high supply pipeline for this year may result in either static or reduced rentals and lower occupancy rates,” Cumberlidge predicted. The current average grade A rentals in Hanoi’s Hoan Kiem district were approximately $50 per square metre, down from more than $60 in previous years. However, tenants could secure more favourable terms on lease renewals with landlords who were keen to maintain their occupancy rates.

Jones Lang LaSalle reports Ho Chi Minh City’s office market was also in a downturn and had experienced the greatest fluctuations of any sector over the past 24 months. “This trend has also been repeated in other Asian cities, including Singapore, where grade A rents have fallen by almost 60 per cent in the past year,” the company said in a statement.

“The magnitude of decline will depend on the extent of growth in the previous upturn and in the supply and demand balance of each market. As such, we expect further declines in office rentals in Ho Chi Minh City through the end of 2009. In the first quarter of 2007, grade A rents on average stood at just $40 per square metre, per month,” said Andrew Brown, country head of Jones Lang LaSalle.

“This is supported by increasing levels of supply and the total stock vacancy rate, which is now in excess of 10 per cent. Twelve months ago this figure was negligible,” Brown added. Another real estate consultant, CB Richard Ellis Vietnam (CBRE), said that the office market in Ho Chi Minh City had finally seen tenants beginning to sign leases.

“Landlords from established properties have begun to resist downward rental pressures, while landlords from new buildings must still offer incentives to attract tenants. Enquires are increasing, but are predominately for spaces from 100-300sqm,” the company said in a statement. According to CBRE, total grade A offices in Ho Chi Minh City increased by 34,426, or 35 per cent, in the second quarter of the year, while net absorption was only 3,744sqm.

The company also predicted that around 195,000sqm were expected to be launched over the next 12 to 18 months, so tenants were holding off for more choices. Landlords with breakeven occupancy rates would want stable prices, while new landlords would continue to face the pressures of decreased rents, the company said. (Dau Tu)

The construction project of the 48-storey Vien Dong Meridian Tower is slated to be officially started by the end of July. The project, with total investment of $180 million, will be located at No 84 Hung Vuong St, Hai Chau Dist, Da Nang City.

The project’s investor is Vien Dong Real Property Joint Stock Co (Viendong Land). Other capital contributors include Vien Dong Investment Consultancy and Technology Transfer Joint Stock Co (under Vien Dong Corp), Trung Nam Investment and Construction Joint Stock Co (Trung Nam Group) and Sagon Telecommunication Joint Stock Co (Saigontel).

Vien Dong Meridian Tower will be the highest building in the central region with the total height of 220 metres. In the building, there will be high class trading zones, international conference centres, four-star hotel, luxury apartment and Grade A offices.

The basements of the tower will be connected with the project of Vien Dong Public Park and Underground Parking Areas in front of the tower. The green land project include three basements, in which two bottom basements are parking areas and the top basement was for trading area. VienDong Land is also the major investor for this project.

The company signed a contract for design consultancy with Mooyoung A&E Co (South Korea) with the total contract value of $10 million and a 600 billion credit agreement with Bank for Investment and Development of Vietnam (Bidv) – Bac Saigon Branch.
Accor Group will take responsibility for hotel management work of the hotel with about 300 rooms, and Savills Group (Britain) for business consultancy. (Vietnam Real Estate Market)

The office market has experienced the greatest fluctuation of any real estate sector in Vietnam and it is predicted to fall even further.

The door is open to tenants seeking favourable rental agreements from landlords

Nathan Cumberlidge, head of Colliers International’s Market Research and Valuation Department, said that in line with Vietnam’s stuttering economy, office rentals in Hanoi had dropped 15 to 20 per cent since the beginning of the year on new deals and lease renewals.

“The market’s recovery is predicted to last until early 2010. However, the high supply pipeline for this year may result in either static or reduced rentals and lower occupancy rates,” Cumberlidge predicted. The current average grade A rentals in Hanoi’s Hoan Kiem district were approximately $50 per square metre, down from more than $60 in previous years. However, tenants could secure more favourable terms on lease renewals with landlords who were keen to maintain their occupancy rates.

Jones Lang LaSalle reports Ho Chi Minh City’s office market was also in a downturn and had experienced the greatest fluctuations of any sector over the past 24 months. “This trend has also been repeated in other Asian cities, including Singapore, where grade A rents have fallen by almost 60 per cent in the past year,” the company said in a statement.

“The magnitude of decline will depend on the extent of growth in the previous upturn and in the supply and demand balance of each market. As such, we expect further declines in office rentals in Ho Chi Minh City through the end of 2009. In the first quarter of 2007, grade A rents on average stood at just $40 per square metre, per month,” said Andrew Brown, country head of Jones Lang LaSalle.

“This is supported by increasing levels of supply and the total stock vacancy rate, which is now in excess of 10 per cent. Twelve months ago this figure was negligible,” Brown added. Another real estate consultant, CB Richard Ellis Vietnam (CBRE), said that the office market in Ho Chi Minh City had finally seen tenants beginning to sign leases.

“Landlords from established properties have begun to resist downward rental pressures, while landlords from new buildings must still offer incentives to attract tenants. Enquires are increasing, but are predominately for spaces from 100-300sqm,” the company said in a statement. According to CBRE, total grade A offices in Ho Chi Minh City increased by 34,426, or 35 per cent, in the second quarter of the year, while net absorption was only 3,744sqm.

The company also predicted that around 195,000sqm were expected to be launched over the next 12 to 18 months, so tenants were holding off for more choices. Landlords with breakeven occupancy rates would want stable prices, while new landlords would continue to face the pressures of decreased rents, the company said. (VIR)