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Hanoi commercial property market slumps Print E-mail
The market for office rental in Hanoi has slumped in the early months of this year after prices reached a peak at the end of 2008. It’s predicted that this trend would continue till the end of this year and even in the coming years due to a rapid increase in supply far outstripping demand.
Although there are no new supply of A-class office buildings for lease, the offered leasing price fell by 8 percent against last year to $49 per square metre per month, and the vacancy rate increased from 0 to 2 percent, and it’s predicted that it would keep increasing. For B-class offices, the leasing price declined by 5 percent year on year to $30 per square metre per month, and the vacancy rate increased to nearly 20 percent of the supplies.
Brett Ashton, general director of Savills Real Estate Consultancy Co said the leasing price of offices for lease in Hanoi would continue to reduce this year because building owners had to lower asking prices to compete in attracting fewer and fewer clients. Asking prices are still high at present but end contractual prices are lower because building owners offer many freebies to new clients.
The pressure to reduce the leasing price was also because of the plentiful supplies from those newly built offices on Pham Hung and expanded Nguyen Phong Sac roads. Each building (LOD, Tien Phong, Sannam, 3D) provides about 5,000 square metres of offices in the market and for large buildings such as CEO Tower-20,000 square metres or CMC-17,000 square metres. The offered monthly leasing price of the offices on expanded Nguyen Phong Sac St is $20-22 per square metre per month, and $25-28 for those on Pham Hung St (service charges inclusive, VAT exclusive). However, it’s forecast that the actual leasing price for these offices in the mentioned-above area would be much lower and the vacancy rate would remain high.
Simon Paterson, director of marketing and management in Colliers International Real Estate Consultancy Co said that in addition to the price, the location of the buildings would concern the lessees. Although the newly built offices for lease located in the new urban area take advantages of better infrastructure and low price than those in the centre of the city, the leaseholders still would like to stay in the centre because of the lack of basic supporting services such as qualified restaurants, hotels, and messy infrastructure and traffic road.
It would take another few years for My Dinh, Cau Giay area to become the new destination choice for the lesser, he added.
It’s admitted that those offices for lease in Nguyen Phong Sac and Pham Hung are still considered attractive for the customers that would like to lease low-priced offices or those having no demands to contact with customers located in the centre of Hanoi.
Doan Van Binh, director of CEO Holdings Investment Co revealed that they have had many customers that would like to lease offices in CEO Tower.
The current buildings located in the centre have to suffer more competitive pressure, not only from those newly built in My Dinh and Cau Giay area but also from the A and B-ranking towers of offices for lease that would be in operation in the near future such as CDC Tower, Bidv Tower, Capital Tower, Resco Tower.
In general, about 100.000 square metres of B-ranking offices and 130,000 square metres of A-ranking ones would be in operation within this year.
The investors have to face with challenges of plentiful supplies and competitiveness among the office-providers, and they would lower the leasing price or offer free supporting services such as parking.
The customers would be the beneficiary in this trend because they can reduce operation cost thanks to low leasing price and other incentives.
 


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