Office-space shortfall sent rents climbing in Hanoi

A shortfall in prime office space fuelled by an influx of foreign firms into Hanoi will soon send rents through the ceiling, a property consultant has warned.
CB Richard Ellis Vietnam (CBRE), an international firm, released Tuesday its third quarter survey of the capital city’s rental and building markets.
Even when the real estate market had been in a slump earlier this year, the premium office and residence market had been buzzing, the report said.
All Grade A and Grade B office space in the capital was fully occupied in the third quarter. The limited supply of office space had led to the continuously spiralling demand, according to CBRE report.
In the third quarter the average rents of Grade A office climbed to US$35/square metres per from month fromUS$31-32 earlier this year, Grade B officeUS$28/square metres per month fromUS$25.
The rate was forecast to go upUS$40/qu.m per month next year or even a little higher, making Hanoi’s rentals be among the highest in Asia.
A fast-growing economy, stable polity, and proactive efforts to join the WTO had made Vietnam attractive to international economic groups, it said.
However, incremental office space (including A and B classes) this year were just 110,000 square metres compared to 200,000 square metres last year, the report said.
Two class-A office buildings, with 3,500 square metres, newly launched in early the fourth quarter, had been fully booked already.
The shortfall in high-end office space could possibly continue until 2008 when many large projects were set to be expanded and new projects completed, CBRE said.
Also according to CBRE, the year 2009 will be the final point for the office market of Vietnam when the relation between supply and demand will reach equilibrium with about 300,000 square metres of office space and it is forecast that no more property projects will be started.
Nevertheless, large foreign corporations preferred A-class office buildings since they expected international standard services like architecture, air conditioned lobby, parking convenience, and broadband internet connection.
B-class office buildings attract medium-sized enterprises, particularly domestic, and costUS$26-28/square metres per month. Some 80 of them have their offices in the B-class buildings, previously leased by foreign companies.
The luxury shopping mall market too was busy, the report said. Places like Vincom City Tower and Trang Tien Plaza costUS$20-80/square metres. and the rate was set to increase slightly due to increasing demands from banks, electronics and fashion outlets.

 

Category: Business