Office Space Demand in HCMC Slowing

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Mar. 3 – Demand for office space in Ho Chi Minh City is slowing down as businesses stall expansion plans or downsize.

Some businesses have even resorted to renting from homeowners instead office buildings.

The marketing director of a popular office building in downtown HCMC who wished to be anonymous told Thanh Nien News that up to 30 percent of offices at high-end buildings were unoccupied while the rate is 40 to 70 percent for lower-grade buildings.

He added that customers have cancelled advance bookings at newly completed office buildings.

In Ho Chi Minh City, office rents go at around US$60 per square meter at high-end buildings on avaerga while second-tier buildings are usually priced at around US$25-US$35 per square meter. On the other hand, grade C level buildings are going for US$14-US$22 per square meter.

Property firm CB Richard Ellis Vietnam said office rents could drop to as low as US$30 per square meter for high-end buildings, $20 for second tier buildings and $10 for Grade C facilities.

The firm added that office space in HCMC would increase by 122 percent to 2 million square meters by 2011. CBRE Vietnam Head of Asset Services Fiona Saunders told Thanh Nien Daily the apartment leasing situation in Vietnam was a matter of serious concern.

As a fallout of the global economic downturn, the limited tenant pool, reduction of company headcounts and a restriction in business expansion were major difficulties facing the city’s office building leasing market, she said.

Such difficulties would force new landlords to aggressively cut rates by as much as 30 percent to compete with those who already hold market shares, she added.