Lease office prices down, occupancy mildly up
By Dinh Dung - The Saigon Times Daily
HCMC – In the year to date, the HCMC office leasing market has seen a further fall of 2.5% of rental prices, but occupancy has slightly increased over the preceding quarter focusing on grade-A segment in the central area.
Given the dipping rental, the area of grade-A offices for lease reached about 13,000 square meters, higher than the average level of 8,500 square meters a quarter recorded last year, said Adam Burry of CB Richard Ellis Vietnam (CBRE).
The average rent offered by realty developers in the first quarter has slid by 10.5% year-on-year to around VND651,000 per square meter for grade-A buildings and around VND367,500 per square meter for grade-B space.
According to Burry, the increase in occupancy in the first three months showed the continued uptrend since the end of last year. In fact, many foreign tenants previously forced to leave the central area because of sky-high rental are taking advantages of lower rent to move back to the center to enjoy more favorable conditions.
A recent market survey by Knight Frank Vietnam indicated that a number of high-rise office building projects have been able to lure tenants by giving more incentives to its customers.
For instance, Ernst & Young Vietnam Co., Ltd. has moved from the grade-B Saigon Riverside building to the grade-A space at Bitexco Financial Tower. Furthermore, a big international bank has moved its office from District 3 to the Green Power Building in District 1 to have better business space.
Newly-operated buildings are in the race to attract tenants to compete with new projects set to join the market within this year or from early 2013.
The market is expected to see new supplies soon.
For instance, the Times Square project on Nguyen Hue Boulevard will be put into use in late 2012, providing office leasing area covering about 12,000 square meters. Meanwhile, it is expected Saigon One Tower and Le Meridien projects on Ton Duc Thang Street will be operated since early next year.
The city now has a total of roughly 1.9 million square meters available for office leasing. Of these, grade-B offices account for approximately 805,000 square meters, grade-A areas make up nearly 304,000 square meters and the remaining belongs to grade-C segment.