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| Cushman & Wakefield: Office rent in city remains high |
| 04-JUL-2009 Intellasia | The Saigon Times Daily page 1 |
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| 4 Jul, 2009 - 7:00:00 AM |
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The average office rent in HCM City, especially at prime locations, is still higher than the reasonable level even though it has fallen sharply in the year to date, according to the general manager of the real estate services firm Cushman & Wakefield (Vietnam) Ltd
The office rent is expensive in certain areas in the city, Toby Dodd told a real estate business luncheon organised by the European Chamber of Commerce in Vietnam (EuroCham) in HCM City yesterday.
Dodd gave the comment when showing a slide of his presentation that unveils the office rent in HCM City in the first half of the year was still much higher than in regional cities like Bangkok, Kuala Lumpur, Jakarta and Manila.
"HCM City is expensive as the rent of space at dominant buildings is still too high," Dodd told the Daily after the luncheon on the topic of "Survival of the Quickest - Living in a Tenants World."
Many buildings in this city offer much higher monthly rents than the "fair reasonable rent" of $30 per square metre, Dodd furthered. "I think half of the market has reached this level now but half the market is still too high."
Last month, the real estate services firm CB Richard Ellis Vietnam (CBRE) released its updates that the monthly rent of offices in HCM City had tumbled by 30-50 percent in the first half of
the year but stood at $60 per square metre, or $10 lower than the highest level recorded in the first quarter and over $25 lower than 12 months ago.
Dodd of Cushman & Wakefield said the coming months would decide whether the average rent of offices for lease in HCM City would reach the reasonable rate as the buildings under construction would be completed.
Dodd forecast that the average monthly rent for Grade B offices in HCM City would fall to $20-25 per square metre.
According to CBRE, HCM City has 1,024,000 square meters of office space as of June as against 910,000 square meters last year. The company put the vacancy rate in central business districts at 15 percent and would double when more projects go online later this year.
Dodd said with $30 per square metre for the Grade A office space, landlords would still have profit. "From the landlords I have spoken to thatis the level they are still profitable." However, Dodd said he did not want to see the rent of Grade A office space to go down lower than the reasonable rate because it would be a bad thing for the market.
Dodd noted the reasonable rent for Grade A offices were based on the ability of tenants to pay, comparison with regional markets, and the supply and demand in HCM City in the current situation. He said supply had outstripped demand in this market.
Dodd said with $30 per square metre for the Grade A office space, landlords would still have profit. "From the landlords I have spoken to that is the level they are still profitable." However, Dodd said he did not want to see the rent of Grade A office space to go down lower than the reasonable rate because it would be a bad thing for the market.
Dodd noted the reasonable rent for Grade A offices were based on the ability of tenants to pay, comparison with regional markets, and the supply and demand in HCM City in the current situation. He said supply had outstripped demand in this market.
Both landlords and tenants should look for win-win solutions and long-term relationships for their mutual benefits in the current time, Dodd said in response to the Daily question whether now was the time for tenants to have a high voice about the deal.
Dodd said the office rent growing too high like previously was not the right definition for a growing office market, especially when companies are trying to cut costs. "A growing market means more buildings and more tenants."
At the luncheon, OUT-2 International Design Consultancy Co managing director Andrew Currie also suggested ways for companies to maximise business efficiency and effectiveness in tough times.
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