The
latest report of CBRE Vietnam on office-for-lease market showed that in Q4 of
2011, the segment welcomed four new projects namely Keangnam Landmark (at 72
Pham Hung St, Hanoi) with 89,000 square metres (s.qm) of Grade A offices and
three Grade B projects like VA Tower, Detech Tower và Mipec Tower.
Total new supply reached 143,000 square meters
with 80% area of projects located in the west of Hanoi. During the last months,
the leasing area was 25,000 sqm but due to huge supply, the vacancy ratio of
the whole market in Hanoi was 28% and that of Grade A offices was 34.5% and
Grade B at 24.4% respectively.
A survey of Savills Vietnam, a real estate
consulting firm, also generated the similar result. It indicated that the
operation of market in late 2011 generally went down in both capacity and
leasing price. Particularly, average renting capacity reached 75% only and the
rental was 514,000 dong per square meter, down 40,000 dong/sqm against the
beginning of last year.
Mr Ngo Minh Son from CBRE Vietnam said that
the office offering price did not decline much but in fact, the real rental
slumped sharply, lower 20% than the offering price through promotion methods,
discount and sell-off.
Hoan Kiem remained the district with the best
operation in terms of leasing capacity, followed by Ba Dinh and Dong Da
Districts while the leasing situation in some areas such as Cau Giay, Long Bien
and Tu Liem districts became worse.
So, in order to attract renters, investors
boosted promotions programs like extend the time renters enjoyed rental
exemption. Even, in centre areas, renters may enjoy the rental exemption in 3-6
months as signing longer 3 year-contracts and 8 months as dealing to rent
offices in more than 5 years.
However, according to the survey of CBRE, the
vacancy ratio along with the price reduction trend of new projects can be seen
in the west of Hanoi. In centre areas, the fulfilling ratio and leasing price
remained stable.
As reported by CBRE, the differentiation
between centre areas and outskirt areas was there due to in Q4, the areas
outside the centre of Hanoi accounted for 80% of 143,000 sqm of new supply in
the whole market.
The supply is estimated to be equivalent with
15% of total current supply, coming from three projects Grade A and Grade B.
Keangnam Landmark building alone took up 90,000 sqm of real floor area for
lease.
Renters in centre areas did not want to change
office because the cost for new equipment, furniture might be several tens or
hundreds of US dollar per sqm.
CBRE and Savills Vietnam forecasted that in
2012, the office-for-lease segment in the areas outside the centre of Hanoi
would continue suffering big pressure as the supply is estimated to surge
whereas number of customers is limited.
Accordingly, with total supply of estimated
1.033 million sqm, in next three years there will be extra 1.1 million sqm of
new floor area in the market whereby customers will have a lot of advantages in
negotiating renting prices and terms. Especially, the expectation on the rental
of below $17 per sqm in outskirt and $30/sqm in centre areas will probably
become true.
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