|In the office sector, HCM City has a lack of large floor plates which reduces choice for large occupiers when finding suitable space.— File Photo
HCM CITY (VNS) — The fourth quarter of this year is expected to witness an increase in leasing activity across most sectors as well as increased investor enquiries from abroad, according to a Cushman&Wakefield Viet Nam report released on last Thursday.
Chris Brown, general director of Cushman&Wakefield Viet Nam, said that as long as inflation is kept in check, next year would be also a much busier year for the real estate market as confidence would return to the marketplace.
There are encouraging signs that suggest that the bottom of the market cycle has arrived.
In the office sector, HCM City has a lack of large floor plates which reduces choice for large occupiers when finding suitable space.
The average asking rent of Grade A building has fallen by nearly 5 per cent quarter-on-quarter, and 7 per cent in comparison with the same period of 2012.
Grade B rents also continued a downward trend, decreasing by around 1 per cent quarter-on-quarter and by about 8 per cent year-on-year.
However, vacancy levels are very low and rental levels are expected to start to move upward in the coming quarters, he said.
Jonathan Tizzard, national head of the Research Valuation, said "the HCM City market has reached the bottom and improvements have already started to show a busy final quarter in terms of leasing activity, paving the way for a recovery in the office market in 2014."
Tenants have been urged to secure competitive lease terms before the market turns.
At the same time, the Ha Noi office market in the third quarter witnessed no new supply entering the market.
In comparison with the second quarter, asking rents for both Grade A and B this quarter went down by 0.5 per cent and 2 per cent, respectively.
It is anticipated that average asking rent for all grades is likely to follow a downward trend in the coming time due to high vacancy rates in existing office buildings.
In the retail area, roughly 90 per cent of Ha Noi shopping centers were occupied this quarter, 1 per cent down compared to the second quarter of this year.
Meanwhile, the retail occupancy rate decreased by 3 per cent quarter-on-quarter.
In the same manner, occupancy rates of shopping centres in HCM City decreased by 1 per cent quarter-on-quarter, reaching 85 per cent.
Crucially, rents remain unsustainably high in many fringe locations and a correction is needed in order to attract tenants and increase absorption rates.
However, the Central Business District retail markets in HCM City and Ha Noi continue to perform well with the highest occupancy rate at 91 per cent.
In the industrial sector, the supply of industrial parks (IP) in the Ha Noi market has a total land lease availability of about 474ha, a rise of 3 per cent compared to the previous quarter.
The third quarter this year witnessed a slight reduction of around 1 per cent in rental rates compared to the second quarter at nearly VND2.25 million/sq m/per period.
The leasable area in HCM City is estimated to be about 62 per cent of the total industrial land scale, or more than 2,200ha.
The majority of the IPs in HCM City report occupancy rates at above 90 per cent as they have been operating for many years.
Currently, developers are turning from long-term land leases to factory construction for lease with areas of about 2,000 – 3,000 sq m.
Poor leasing performances are expected to continue for the next few years due to a downward trend on FDI capital, leading to further pressure on rental levels.
While the oversupply of stock in the apartment for sale market continues, developers are exploring new ways of enticing customers and the government remains committed to helping this market sector.
In Ha Noi, only low-cost projects saw a good absorption rate while the high-end segment witnessed almost no transactions in this quarter.
In HCM City, nearly 80 per cent of stock absorbed by the market was in the low end sector, with an average price of just over US$700 per square metre.
With increasingly attractive payment terms and a large choice available, the rest of 2013 and early 2014 is expected to remain a buyers' market across the residential sector.
On the same day, alongside traditional market reports, Cushman&Wakefield Viet Nam has announced that it would release the new Market Beat video that gives an overview for the third quarter of the real estate market.
This is the first of its kind introduced in the Vietnamese market. — VNS