The managing director of Savills Vietnam Ltd. has stressed that the toughest time is over for landlords as they now can see signs of recovery as rents of offices for lease are nearing the bottom, especially for Grade A and B buildings.

“The worst is over for landlords,” Brett Ashton said, adding that the balanced market would soon return.

Ashton raised the point at a business dialogue held by the European Chamber of Commerce in Vietnam (EuroCham) in HCMC on Thursday for him, Fred Burke of Baker & Mckenzie, and Dominic Scriven of Dragon Capital Ltd. to share their views on Vietnam’s economy with representatives of both local and foreign companies.

Ashton said rents of Grade A offices continue to decline but at a slowing pace, and put the average rent and service charge at US$50 net per square meter by the end of the first quarter of 2010. Meanwhile, the rent of Grade B offices is leveling off.

Ashton said the monthly Grade B rental had been more than halved from the peak level in March 2008, from around US$60 per square meter to some US$23 per square meter while the Grade A rate had gone down from nearly US$100 to US$60 and then US$50 net.

Ashton told the Daily after the event that the monthly rents of Grade C offices continued declining to US$12-15 per square meter and Grade B to US$18-23 per square meter, which he said was still higher than Grade A in Bangkok.

He said there were good signs for Grade A and B, and that space at Kumho started to fill up. He noted Kumho Asiana Plaza was the latest operational Grade A office building in HCMC and there would not be any new project of this type running in at least two years.

Ashton predicted the Grade A rental would start to increase in early 2011 at a steady pace and the Grade B rate would take longer time for recovery because of ample supply.

Ashton said there were now six Grade A and 31 Grade B buildings in HCMC with combined space of 475,000 square meters. He forecast the office supply in HCMC could double in the next three years.

Asked about the recovery of Vietnam’s real estate market in 2010-2011 as experts forecast, Ashton said the residential segment had already picked up in Hanoi and Danang, and good projects in HCMC fared well.

He called for developers to pay more attention to design as buyers were getting smarter and being choosier.

“Developers need to understand who they are building for, the market, and competition… Selling has been more difficult,” Ashton said.