Office Rent Predicted to Rise by 15 Per cent in Hanoi

According to statistics of CB Richard Ellis Company (CBRE), Hanoi has at least two A class office buildings and 32 B and C class buildings with a total area of 130,000 square metres under construction. Outstanding projects include the Pacific Place, the VIT Tower, the Opera Business Centre, the Hacinco Tower and the Devyt Tower. These buildings will be put into operation in the final quarter of 2005 and 2006.

 

Highly increased foreign direct investment and promoted operation of multinational corporations, non-governmental organisations and diplomatic missions in Hanoi has resulted in a high demand for A and B class office rent in Hanoi.

 

In the second quarter of 2005, most A and B class office buildings in Hanoi gained a high occupancy rate. This has resulted from the fact that the demand keeps rising while supply remains constrained. Notably, in 2004, 80,395 square metres of offices were launched to the markets and it has almost all been rented.

 

Average rent of an A-class office in Hanoi’s downtown is put at US$26 per square metre per month, including service fees, which fluctuates from US$5 to 8 per square metre per month. Average rent of a B-class office in the centre of Hanoi stands at US$19 per square metre per month, including service fees of US$5.

 

Marc Towsend, general director of CBRE in a recent press conference in Hanoi, said that the demand for A and B class offices in Hanoi had increased as many Vietnamese companies had been aware of benefits from renting offices in high buildings, which helps create a good image for their companies.

With an occupancy rate of 100 per cent for A class offices buildings in Hanoi and increased demand for top quality offices, CBRE predicts that office rent will have increased by between 10 and 15 per cent before some more A class office buildings are put into operation in late 2006.

 

Towsend said that a new supply of offices for lease in Hanoi in year-end months of 2005 would be put at around 20,000 square metres, but mainly from B class buildings in suburbs of Hanoi. Until the final quarter of 2006, there will be no A class office buildings put into operation. Some buildings under construction will start operation in late 2006 and early 2007. These buildings will add around 110,000 square metres to the office-for-lease market. With rent of offices in Hanoi downtown expected to increase in two or three years’ time, the local office-for-lease market may face rent pressure when the number of operational B class offices, which have been rented in recent months, increases.