CBRE, Savills, and Knight Frank made a survey on Ho Chi Minh City real estate, which shows that in the second quarter, retail market spaces and leasing office continued to decline compared with the first quarter and the same period last year.
“Price of offices for rent of all categories went down,” said Savills Vietnam. Average office rents in HCM City in the second quarter was US$28/sq.m per month, down three percent compared with the first quarter and down 10 percent compared with the same period last year. The reason is that the total supply in the second quarter increased by four percent compared with the last quarter and 23 percent compared with the same period last year. Office area from 40 to 100sq.m was preferred in the second quarter.
According to CBRE, in the second quarter, offer rents of all categories fell. The average offer rent of Class A decreased by 1.9 percent compared with the previous quarter, down to US$34.21/sq.m per month. This is the 7th consecutive quarter that the rent of Class A was reduced, and also was the quarter with lowest rent since 2006. Compared with the same period last year, prices were down by 8.8 percent. Rents of A grade old buildings tended to remain firmly in the surveying quarter due to high and stable occupancy rates. Rents of Class C and Class B were also reduced, in which the rent of Class B was down to its lowest price since 2003, and the rent of Class C was down to its lowest price since 2004.
Also, CBRE reported that the number of apartments offered in the second quarter decreased by 12.5 percent compared with the previous quarter, with a total of 4,926 units from eight projects. Selling price offered in all segments decreased. In particular, the luxury segment and the secondary one had been the most decreased, by one percent compared with the previous quarter. “The real estate market will continue to be stagnant while the tightening monetary policy continues, and people's confidence remains low,” a CBRE representative asserted.
In the retail market categories, according to the survey in the second quarter by Colliers International Vietnam Company, average rents of retail platforms in the most famous shopping streets in Saigon such as Dong Khoi, Le Loi, and Le Thanh Tong was US$90/sq.m monthly. The retail lobby had the highest rents of US$112.5/sq.m a month while the rent of Trade Centers was US$102.5. The smaller scale shopping areas had offer rents lower than US$52.5/sq.m per month.
Savills Vietnam published a study of the real estate market in HCM City in the recent time. The highlight of the report is the sharp decrease in the price of villas and townhouses market in the city in second quarter of 2011. Average price of a villa on the secondary market decreased by 10 percent compared with the first quarter of 2011. This price was 110 percent higher than the primary market. Savills found that the primary market is quite fiercely competing with the secondary market. What is more remarkable is the sharper decrease in the price on the primary market (new products recently launched by investors). Over 80 percent of apartments transacted on the primary market had average price of under US$400,000 per unit, leading the primary market average price to fall by 21 percent compared with the previous quarter, down to US$430,000 per unit. Small and medium-sized houses with reasonable price are more preferable.
To explain this price decrease, Mr Truong An Duong, Head of HCM City Market Research Group of Savills said that although the supply could increase in the coming time, there would be a number of projects stagnating because the economy is facing many difficulties. While according to Knight Frank, the real estate market in HCM City will continue to be stagnant under the tightening monetary policy; investors and buyers seem to be “full of hardships” due to difficult access to credit and high interest rates. In addition, buyers are reluctant to collect information and waiting for reduced interest rates or until they feel the investment amount is really worthwhile.
The real estate management consulting unit also said that from 2012 onwards, the HCM City market will be expected to have about 1.2 million sq.m of new retail area. The future supply in District 1, 2 and 7 will account for about 70 percent of total future supply. In particular, District 7 ranks first among districts regarding future retail supply. This will trigger competition on advertising, marketing, and preferential offer rents among retail centres to attract tenants.
Ha Linh
Vietnamese
