Ho Chi Minh City office rents continue to tumble

HCMC, Mar 9, 2009. Office rents in Vietnam, particularly in HCMC, keep going down and have started to fall faster due to new developments in the city and as the global crisis deepens, according to Cushman & Wakefield.

Grade A office rents will reach US$ 30++ per sqm per month in 2009, principally due to the significant growth in supply during the year. The monthly grade B office rent would go down to US$ 20-25 per sqm and the grade C could reach US$ 10-15.

CBRE managing director Marc Townsend, predicted the office rents could tumble to the 2002 levels of US$ 30 per sqm for grade A, US$ 20 per sqm for grade B and US$ 10 per sqm for grade C.

The monthly rates fall from around US$ 48-60 per sqm for grade A, US$28-40 for grade B and US$ 14-25 for grade B that CBRE released last month. Earlier last year, rents stood at nearly US$ 70 per sqm for grade A, US$ 45 for grade B and US$ 39 for grade C.

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.

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. Grade A office buildings to be up and running in HCMC included Kumho Asiana Plaza with available space of at least 28,000 square meters, Center Point with around 30,000 square meters, HCMC Building with 10,500 square meters, A&B Tower with 25,500 square meters and the Financial Tower with 119,000 square meters.

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 around US$ 17-40 per sqm per month depending on locations.

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