Vietnam’s office-for-rent market, particularly in HCMC, will keep going down with prices predicted to fall 50 per cent in the coming months as global economic crisis deeps, according to foreign real estate advisors.
“Grade A office rents will drop to US$30++ per square meter per month in 2009, principally due to the significant growth in supply during the year,” Cushman & Wakefield, the world leading company in real estate services, predicted.
Cushman & Wakefield also projected the monthly grade B office rent to go down to US$20-US$25 per sq.m and the grade C could reach US$10-US$15.
The company unveiled the projection not long after another big property services provider CB Richard Ellis (CBRE) forecast a sharp decline in office rents this year when taking into account the happenings in Vietnam and elsewhere in the world.
The situation is partially attributed to an abundant future supply of office buildings of all types, Cushman & Wakefield said.
Cushman & Wakefield did not clarify the future supply of offices for lease in HCM City, but CBRE earlier this year said the office space available in the city would rise to over 1.2 million square meters by the fourth quarter 2009, and double within three years.
“With the global slowdown continuing to gather momentum, office rents are under pressure as occupiers focus on expense discipline and cost reduction as they look for ways to survive the economic turmoil,” Cushman & Wakefield said.
The company explained office rent took the largest fixed costs of most businesses, followed by staff and information technology. Currently, companies are also cutting back on office space as staff numbers dwindle, and they are also slashing their future growth forecasts.
Actually, the economic slump has bitten much the budget of office building operators and investors since the fourth quarter of last year, when Cushman & Wakefield said the prime office rents fell to as low as US$17-US$40 per square meter/month depending on locations.
Cushman & Wakefield said falling rents should assist companies in their cost cutting, and could mitigate the need for further headcount reduction.
“As the global crisis deepens rents have started to fall faster driven by landlords of new developments, and 2009 is expected to be a tenants market.”
Cushman & Wakefield predicted a lot of tenant movement between buildings this year. “We view this flight to quality. However, it is a good thing for the property market, and for Vietnam generally as the country seeks to maintain its competitive edge in the region.” (Vietnam Economic Times)
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