Specialists here forecast that the demand for renting offices in 2010 will increase slightly because Vietnamese economy is showing remarkable recovery signals, foreign companies are returning to Vietnam and domestic enterprises are expanding business production scope. However, in next four years, there will be about 1.5 million sqm of additional office-for-lease from 100 property projects. In 2010 alone, 170,000 more sqm of offices will be supplied to the market, leading to the oversupply of this property segment.
The recent market research of Cushman & Wakefield Co showed that HCM City's office rental in slumped most in Asia. Particularly, in 2010 early, the office rentals of some buildings in central HCM City plunged nearly 53 percent year-on-year. Fulfilling ratio of newly completed buildings remained low while a lot of extra works such as Bitexco Financial Tower are going to be finished.
The office oversupply also is seen in Hanoi when the office rental here fell 20-25 percent in 2009. Meanwhile, 2010 will welcome the completion of a series of new office projects, including the $1.05 billion Keangnam Landmark Tower in My Dinh (the construction was started in August 2007 and expected to finish in October 2010), which will supply a large area of offices to the market.
In addition, Hanoi will witness the operation of Crown Office of Crown Plaza housing, hotel and office complex in Le Duc Tho St. Crown Office comprises two basements, 23 storeys and two technical floors with total construction area of 18,200 sqm and leasing area of 12,500 sqm.
According Savills Vietnam, total office supply of Vietnam in Q4 of 2009 reached over 600,000 sqm, surging 23 percent quarter on quarter. Newly inaugurated offices accounted for about 18 percent of total supply whereas the leasing efficiency continued declining by 2 percent in Q3 of 2009. In details, the leasing capacity of offices Grade A fell 18 percent, Grade B dipped 1 percent and Grade C down over 10 percent in Jul-Sep.
Typically, the office-leasing market of Da Nang City attained a good performance thanks to the city's impressive economic growth and convenient investment environment. From Sep to December 2009, Da Nang City had 19 office buildings with total area of 62,500 sqm. The office rental here ranged between $5 and $17 per sqm a month. Its average rental decreased slightly against Q3 of 2009, in which the highest rental of $17/sqm/month was offered at Indochina Riverside Tower and Da Nang Software Park.
Similarly in Binh Duong, there were extra four office-for-lease buildings with total area of 1,670 sqm in February 2010, bringing total number of office buildings in the province to six with 3,520 sqm. Binh Duong's office rental averaged at $10/sqm/month and the fulfilling ratio was only 47 percent. Also Nha Trang City has only three office buildings supplying 5,275 sqm with the average rental of $13/sqm/month, Savills reported.
In 2010 and following years, the office rentals will return to the real price levels. Investors will have to consider more carefully as pumping capital into the property segment. On another hand, customers are getting more professional and sensitive because they have many options.
Matthew Powell, director of Savills Vietnam-Hanoi Branch said that Vietnam's property market is at high potential. Possible movements show the evolution process of the country's property market.
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