Office leasing prices in Ho Chi Minh City continued to be slashed during the second quarter of 2010 amid a rise in vacancies.
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Competition helped office prices to continue dropping |
According to statistics made available by real estate company CB Richard Ellis Vietnam (CBRE), during the second quarter of 2010, another 9 office buildings were completed and put into use in the city. That brought the total area of leased offices in the city to 1,415,337 square metres, an increase of 9.6% compared to last quarter.
Vincom Centre’s luxuy office building alone put 75,924 square metres into use for the second quarter. It contributed to a 45.8% increase in the amount of grade A offices over the previous quarter.
Thus, the competition between Grade A offices in existing and newly-built buildings was tightening up.
CBRE’s report said that the average rental prices for Grade A offices for the second quarter were USD37.51 per square metre per month, down 5.34% against the previous quarter. Grade B office leasing was USD19.28 per square metre per month, down 7.95%.
In 2009, many real estate experts and companies predicted that office rental prices in Ho Chi Minh City could not slide anymore. However, they have continued to drop in the first 6 months of 2010.
In the next 3 years, an additional 1.1 million square metres of offices will be added to the market. Thus, the competition among investors will be more challenging. They will need to come up with strategies to provide rent at a price that is competitive while still profiting.
CBRE warned that, “Investors of Grade A offices have to be more flexible and catch up with the market development to fight over new rivals.”
The market is forecasted to be stable in the future because leasing prices reduced and the demand increased 192% for the second quarter compared with the same period of last year.
CBRE’s data also revealed that the demand would continue growing and domestic companies would play a vital role in shaping the market. They accounted for 63% of the total demand so far this year.