Vietnam’s retail property market will see a boom in rentals this year while the office market will remain weak due to increased supply, real estate firms have forecast.
Service provider Savills has said office rents will continue its declining trend and the large amount of office space supply would ensure that the market still belongs to tenants, not landlords.
The Vietnam office of the world’s largest real-estate broker, CB Richard Ellis Group Inc., said Grade A asking rents have dropped by 50 percent from the peaks of mid 2008.
Diamond Plaza – HCM City (photo : Ashui.com)
In Ho Chi Minh City, over 100,000 square meters of vacant space in 2009 are still waiting for tenants, and more than 350,000 square meters of new space will come into the market this year.
CBRE said that with 53,000 square meters of Grade A and B space currently empty and over 150,000 square meters of more space coming in 2010, office rents in Hanoi will also continue falling in the mid-term until construction slows.
The prospects for the retail property market, meanwhile, are much better.
According to Savills, average rent in HCMC is around US$97.4 per square meter per month, up 25.5 percent from the third quarter last year.
Marc Townsend, general manager of CBRE Vietnam, said the highest retail rent has reached $250 per square meter per month in the central business district.
Rents at Vincom Center in HCMC’s District 1, for instance, are quite high, around $200 per square meter per month, but 80 percent of the retail space there has been leased already, he said. The shopping center is expected to open at the end of April.
CBRE said the average occupancy rate in HCMC’s retail market is now 95.3 percent while that of Hanoi’s is 83.3 percent.
Demand for retail space is expected to rise as Vietnamese retail chains expand and more international brands arrive in the country, the firm said. It noted that large international retailers including Tesco and Wal-Mart still “remain on the sidelines.”
