The average prices for leasing offices in class A and class B segments in the second quarter have fallen by five and nearly eight percent, respectively, compared to the first quarter. Further reduction may not happen, since the prices seem to have reached the bottom level.
In July 8, CB Richard Ellis Vietnam Company (CBRE) announced that, in the second quarter, price offered for class A segment has fallen from $39.6 to $37.5 per square metre a month. There have also been reductions of 7.95 percent and 3.12 percent in leasing price for class B and class C segments, respectively. Leasing price for class B segment has reached $19.82 per square metre a month. With relatively low price range, class B buildings are considered being in prosperous period with the addition of a number of new buildings with good technical infrastructure and services.
According to CBRE, total spaces of the leasing office market for all three segments have risen by 9.6 percent in the last three months. This rate is equivalent to over 124,000 square metres of new leasing spaces from nine additional buildings. Currently, the total office leasing spaces in Hochiminh city has gone up to over 1.4 million square metres.
The prediction that no further reduction would happen to the leasing price based on the match between supply and demand, the recovery momentum of the economy and the offered price level which is very close to the bottom level of 2006, according to CBRE.
In the second quarter report on leasing office market in Hochiminh city of Savills Vietnam Company (Savills), the average leasing price of all segments and districts in Hochiminh city is currently at $32 per square metre monthly with leasing capacity averaged 88 percent.
However, there is a big difference between Savills' and CBRE's average price range for office leasing in class A, B and C segments in the second quarter. In particular, according to Savills, the leasing price for class A building is $59 per square metre a month, class B is at $33 per square metre a month, and class C is $22 per square metre per month.
Savills' representative said the difference between the price range of CBRE and Savills is due to the difference classification methods used for class A, B and C, and space calculation methods and the differences in tax costs and service charges in the market. Using different calculation methods could lead to big difference in price per square metre of the same segment.
According to Savills, average office space for each employee depends on the nationality of the company or company's main business line, varying from five to 20 square metres per person. Most leasing contracts were for less than 100 square metre spaces. Class B is still the preferential option of the both current businesses and new investors planning to do business in Hochiminh city.
In Hanoi, office leasing prices in class A segment have hit the lowest level in three years.
According to CBRE, although there has been reduction, the vacant rate in Hanoi is still at high level, compared to the previous quarter. This rate is 7.51 percent in class A buildings, down by 1.75 percent, 18.24 percent in class B buildings, down by 3.32 percent compared to the previous quarter.
The offered leasing price in class A segment has fallen by 5.9 percent, reaching $39.66 per square metre a month. According to Marc Townsend, managing director of CBRE, this is the first time, since the third quarter of 2007, average leasing price of class A has fallen below $40 per square metre a month. Offered price in class B segment remains table at $26.42 per square metre.
According to CBRE's research, in the second quarter, there will be additions of about 7,600 square metres and over 5,000 square metres into class B and class C segments, respectively. It is remarkable that there would be almost no new supply for class A segment. New leasing spaces for class B segment have reached 16,830 square metres whereas just 2,030 square metres for class A segment.
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