Average office rent at all grades in HCMC and Hanoi continued falling in the first quarter of this year and is expected to continue the downtrend in the coming time . . .
Average office rent at all grades in HCMC and Hanoi continued falling in the first quarter of this year and is expected to continue the downtrend in the coming time because of abundant supply in the market, according to market research companies.
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Savills Vietnam released a quarterly report on Tuesday, saying HCMC’s average office rent at all grades and in all districts in the first quarter of this year fell 3% from the previous quarter and 11% year-on-year.
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| A bird’s eye view of some office buildings located along Le Duan Boulevard in HCMC’s District. |
The office market recorded an average rent of US$61 per square meter for Grade A, US$29 per square meter for Grade B and US$22 per square meter for Grade C buildings in HCMC, according to the market research company.
The decline in office rent could be attributed to an increase in supply.
Savills said the first quarter of this year witnessed total supply in HCMC’s office market increasing by 5%. The company said 42,000 square meters of office space was added in the first quarter, taking the total to around 838,000 square meters in 138 office buildings of all grades in the city, with 54% in District 1 alone.
HCMC’s office take-up in the quarter was recorded at about 39,400 square meters, and the majority of office transactions occurred for small space generally below 100 square meters.
Grade B still holds a strong preference for both new entrants and existing tenants in HCMC, according to Savills.
The average occupancy for all grades achieved 89% in the first quarter and remained stable as compared to the previous quarter. However, vacancy will increase as more products come ontothe market this year.
Savills projected an additional supply of 315,000 square meters would join the market by the end of this year, half of which comes from three notable projects including Vincom Tower, Bitexco Financial Tower and A&B Tower.
Talking about the rising vacancy in the future, Brett Ashton, managing director of Savills Vietnam, told the Daily on Tuesday that clearly the rate of vacancy would continue to rise as more products are launched ontothe market.
Ashton projected that the lack of new Grade A space coming onto the market over the next two years would lead to rising occupancy for this grade. Meanwhile office rents of the middle and low grade segments would continue to fall in the coming time.
“Grade B and particularly Grade C rents will suffer continued falls in rent through next year, but we expect to see Grade A rents stabilizing and climbing again in early 2011 given that there is no new Grade A supply currently under construction,” Ashton says.
In another market review, CB Richard Ellis Vietnam (CBRE) said the office rent in the capital city of Hanoi decreased in the first quarter of this year due to abundant supply.
Richard Leech, managing director of CBRE, said the market saw a slight decrease of 3.55% quarter-on-quarter to US$42.16 per square meter for Grade A office rent.
Meanwhile, Grade B office remained stable with rents averaging out at US$26.77 per square meter.
In the first quarter, there was a Grade B project named Capital Tower with some 21,000 square meters joining the market there.
According to CBRE, vacancy in Hanoi market totals around 80,000 square meters, the biggest number since 2004.
However, more projects due to join the market this year will cause supply to far outpace demand, and vacancy in the market will increase up to 150,000 square meters by the end of this year, according to the market researcher.
Leech of CBRE remarked that landlords at all grades of office have revised down rents to meet the market demand, but more supply will continue to put more pressure on office rent in the coming time.
VietNamNet/SGT
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