HCM CITY (VNS) — The high rate of occupancy and period of rent stability in the commercial leasing sector in HCM City may be short-lived, and the rents for most grades in Ha Noi should continue the downward trend, Cushman & Wakefield has said in a report.
While the solid start to 2014 in HCM City has continued into the second quarter, over 50,000sq.m of office space is due to come into the market this year from three projects in the CBD area and a further 110,000sq.m in the first quarter of 2015, subverting this stability, it said.
In Ha Noi, more than 800,000sq.m of office space across all grades is expected to hit the market in the next two years, keeping a downward pressure on asking rents, it said.
C&W expects 2014 to be a favourable year for tenants, while landlords will have to suffer from fierce competition from new supply.
The first quarter saw opposing trends in the commercial leasing sector in Ha Noi and HCM City, according to Alex Crane, C&W's national head of commercial agency.
Office occupiers in Ha Noi tended to move west due to the competitive rentals there and large incentives on offer from developers, while occupiers in HCM City desired to go back to the CBD area, he said.
Rents in the two cities have stopped moving in correlation, he added.
In HCM City, there were no new office buildings in any grade.
Grade A segment occupancy went up by 3 percentage points from the previous quarter to 91 per cent, but rents continued downward, decreasing by 1 per cent quarter-on-quarter to VND987,000 (US$46.8) per square metre per month.
Grade B occupancy remained unchanged at 91 per cent quarter-on-quarter. While its rents too remained unchanged from the previous quarter at VND529,800 ($25.1), they were down by 4 per cent year-on-year.
The total absorption of both grades stood at nearly 14,000sq.m, including nearly 5,600sq.m for grade A.
In Ha Noi, the first quarter witnessed the entry of five grade B projects — Eurowindow Multi-complex, Times City, Song Hong Parkview, Gelex Building, and PV Oil Building — taking total supply to 723,000sq.m, an increase of 12.1 per cent quarter-on-quarter.
Grade A stock remained unchanged at 330,000sq.m. — VNS