3:28:19 PM | 19/2/2009
The rate of unoccupied offices of B and C grade in Hanoi has exceeded 10 per cent although clients had great difficulties finding offices to lease just a year ago.
Unoccupied offices can be seen not only in districts in the suburbs of the city, but also in B-grade buildings which have been heavily invested in and have the average price of US$35-50 a month and buildings in Hoan Kiem district in the center of Hanoi.
Pham Thanh Hung, Deputy General Director of Cen Group, said that one year ago, when the real estate market was hot, offices for lease were always fully occupied. Meanwhile, office buildings now have the occupancy rate of just 90 per cent.
Chu Vu Hung, Head of the Investment Consultancy Division of Tai Tam Colliers Company, said that besides high-rises, 2-3 story-houses in old quarters and on major streets like Tran Hung Dao, Ly Thuong Kiet and Hai Ba Trung are also idle.
One year ago, a lot of banks had to pay US$15,000 per square meter a month to lease offices on those streets. However, as business has been facing difficulties, office owners have had to slash leasing fees to just around US$10,000-12,000 per sq.m.
Brokers say that the economic difficulties have forced a lot of companies to narrow their offices. Currently, the majority of companies only pay US$20 per sq.m for offices, while B-class office leasing fees are still hovering around US$40 per sq.m, down 15-20 per cent from the highest peak.
Small- and medium-size companies have decided to move their offices to areas far from the centre, or lease offices of lower grade.
Pham Duc Toan, Director of EZ Vietnam Real Estate Company Ltd, said that 20-sq.m offices prove to be the choice of many service companies and bank branches. Instead of paying around US$30 per sq.m, they just have to pay VND3-9 million a month.
In Hanoi, only A-grade offices which have the average leasing fee of US$55-70 per sq.m still are fully occupied. This has been explained by the fact that unlike B and C-grade offices, which have the leasing fees of less than US$35 per sq.m, the supply of A-grade offices is smaller.
There has been no new supply source in the last two years, since the appearance of Pacific Place. Clients of A-class offices are big corporations which have no financial difficulties.
According to CB Richard Ellis Vietnam, a real estate consultant and service provider, Hanoi’s office market will be more profuse in 2009 than in 2008. It is estimated that the total supply will be some 400,000 sq.m, including 100,000 sq.m of A-grade offices, and 350,000 sq.m of B-class offices.
Experts say that the situation will be settled when the real estate market recovers.
Marc Townsend, Managing Director of CB Richard Ellis Vietnam, said that the market will recover within the year. He thinks that the HCM City market will recover in nine months, while Hanoi will recover a little later, three or six months later. (Liberated Saigon)
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