>> Office rents continue to slide in HCM City
An oversupply in office spaces is likely to bring about price reductions in the short term, according to real estate firm Colliers International.
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| Oversupply to cause downward pressure on office rental |
The Vietnamese realty market is still feeling the effects of the global economic downturn, according to Colliers. In addition, at the end of the first quarter of this year, Hanoi had 16 Grade A buildings with a combined 200,000 square metres of space for lease.
The current occupancy rate in Hanoi’s office buildings is 86.7%, at an average of USD39.2 per square metre. The prices remain unchanged since late 2010, the occupancy rate has slightly decreased.
Despite offering competitive rates, Charmvit Tower on Tran Duy Hung Street is still unattractive to customers, contributing to the stagnant situation of the city’s office-for-lease segment.
This year, an additional 240,000 square metres of Grade A and B space is expected to come onto the market. This figure is equal to half the current supply. Two buildings Keangnam Hanoi Landmark Tower and EVN Building account for 45% of the amount.
Other large-scaled projects that have recently emerged include MIPEC Towers, BIDV Tower and Charmvit Tower.
Monthly rentals vary according to districts in Hanoi. Hoan Kiem and Hai Ba Trung average at USD34 per square metre, while Cau Giay and Tu Liem are at USD23.5.
Last year, to deal with the low occupancy rate, the Horizon, Fortuna and Vietnam Trade Union hotels converted all their available office space into hotel rooms. Even hotel room occupancy, however, is hovering at around 80%, worrying owners.
Some investors have opted to lease one or more floors of a building, for the long-term, to a secondary investor, who will take responsibility for finding occupants.
For instance, IDJ has hired three floors of Charmvit Tower. Colliers forecast that this trend will continue, particularly for big projects.
Grade-B offices have seen better results with a slight rise in the occupancy rate over the past two consecutive quarters. The current occupancy rate for Grade B is estimated at 87.9%, with fees at USD26.1 per square metre.
