Vietnam among the world’s most expensive place to rent offices

Despite an abundant supply, Vietnam is still among the world’s most expensive place to rent offices.

View of the office building Bitexco Financial Tower in downtown HCMC. Ho Chi Minh City and Hanoi are ranked 19th and 21st respectively among the world’s 100 cities having the highest office rental (Photo:Minh Tri)

Ho Chi Minh City and Hanoi are ranked 19th and 21st respectively among the world’s 100 cities having the highest office rental, according to UK-based property market consultancy Knight Frank.

The monthly average rentals in the southern hub and the capital city amount to US$38 per square meter and $36.5 per square meter respectively, which see both have higher rental than the US’s Manhattan, Germany’s Frankfurt, China’s Beijing, Belgium’s Brussels and Italia’s Rome.

Statistics from local real estate market consultancies show the amount of rental offices in HCMC and Hanoi is getting abundant. Nearly 100,000 square meters of offices for lease have been built in Vietnam’s two biggest cities.

UK real estate service provider Savills said in a quarterly report that office spaces in HCMC expanded 7 percent in the first three months of 2011, reaching 1.1 million square meters.

London-based DTZ Research said in a report last week that the vacancy rate in HCMC in the first quarter was 20.2 percent. That compares to 10.5 percent in Bangkok and just 3.3 percent in Singapore.

Occupancy for Grade A offices in particular was even lower, at approximately 63 percent, due to the large amount of space available at the new Bitexco Financial Tower and Vincom Center in the city downtown.

These new buildings, with a combined 110,000 square meters on offer, are still trying to attract tenants. According to a report in last week’s Thoi Bao Kinh Te Saigon magazine, the two buildings, despite their prime locations, have only been able to fill up 30-40 percent of their spaces.

Analysts at DTZ forecast that around 270,000 square meters of office space will come into the market in the remaining months of 2011.

In Hanoi, a number of new rental offices with the total area of 150,000-200,000 square meters is expected to make debut this year, with 87 percent of offices in downtown likely to be occupied and about 75 percent in outlying districts being rented.

US-based real estate market consultancy CB Richard Ellis said in a report that the average office rental in downtown Hanoi has remained unchanged since the final quarter of 2009.

Property experts expect the rental will continue to move up in spite of the profuse supply as owners of new offices for lease rely on the rental of existing ones to set their prices.

Dr. Vu Dinh Anh, deputy head of the Price and Market Research Institute, said the surging amount of financial institutions including securities companies, banking branches, insurers and investment funds made the gap between the demand and supply of rental offices.

Knight Frank said the global real estate market was showing signs of recovering, with office rentals of the world’s trading centers including London, Hong Kong, New York and Singapore on a rise.

By Hoai Tram – Translated by Vu Minh

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