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Tony Milton MRICS

BSc (Hons) Est Man

Fast Facts

Date : Sunday, 04 October 2009
Category : Realty - HCMC Offices

CHRONOLOGICAL ORDER : Scroll to bottom for latest info


301109-The office¬for-lease market in HCMC is yet to show signs of recov¬ery from the economic down¬town, due to an increased sup¬ply in high-rise office space. The total area of high-rise offices would reach 1m sqm in the next few years of which 60% is located in District 1. Meanwhile, the demand for offices for lease has dropped in the 3rd Quarter and continues to fall in the 4th Quarter. Rental prices are declin¬ing to stimulate demand however many high-sky of¬fice buildings for lease remain vacant. The benchmark of office ¬for lease prices has dropped by 30-50% with prices in HCM City bottoming out. The current ceiling price is $70sqm a month. Kumho Asiana Plaza, a newly built commercial building that started opera¬tion at the end of the 3rd Quarter has supplied 25,700sqm making the supply of A level offices for lease soar by 5%. The operation of Kumho Asiana Plaza in particular has caused the occupancy rate of A-level offices for lease to fall by 15% from 96% to 81%. Several domestic and for¬eign firms are reducing busi¬ness, production activities and employees due to the global slowdown. However, many say that when the economy improves the price of commercial premises is certain to increase. For lease A level offices prices, ranged between $60-¬100sqm a month in 2008, have now fallen to $40-70. Similarly, office prices of B-level towers reduced to $30-35sqm a month from $40-45. Mean¬while, prices of C-level towers have reduced to $10-15 from $20-27sqm. VNN

Some provisional figures featuring activities in the market in 2009 : -
Activities Residential Office space Retail space
Launched 33 projects with 10,948 units 238,585 sqm 36,440 sqm
Sold/taken 5,169 units 154,458 sqm 29,289 sqm
Expected in 2010 27,383 units 385,668 sqm 137,868 sqm

020210-Petrovietnam Fertilizer and Chemicals Corp, Petrovietnam Finance Corp and Petrovietnam Oil’s VND758bn / $41m office building covering 1,750sqm ie $23,426sqm on Mac Dinh Chi in District 1 has 14 floors and 3 basements and offers 16,000sqm of space ie $2,562sqm and open in 2011. SGT

230210-Office rentals in HCMC have reduced against 2007 due to an increase of 38% in office space supply in 2009. Grade A office rent in the city is between US$55-60/sqm while grade B is around US$30. SGT

020310-Office rents of some buildings in the center of HCMC have decreased by nearly 53% against the office fever in 2007, the strongest decline in Asia. Some newly-built office buildings in the city have yet to be fully occupied due to low demand. SGT

070310-Some office buildings in the center of HCMC are offering monthly rents of only US$10-11/sqm. Most of the office buildings in the city had been renting space for US$20-25/sqm month. SGT

150310-The office market in HCMC provided 238,500sqm last year, and the absorption level was around 154,000sqm and rents appear to be bottoming out after last year's falling, and several deals for around US$30++sqm are being signed each month. Big projects will join the market this year, adding more new supply to the market. It is projected that vacant space will reach 170,000sqm, about 134,000sqm of new space and 37,000sqm. VNN

120410-Average office rentals in the 1st Quarter continue falling, by 3.6% against the 4th Quarter 2009 to around US$27sqm. Office occupancy increased a slight 2% to 85%. SGT

140410-Average office rent at all grades in HCMC and Hanoi continued falling in the first quarter of this year and is expected to con¬tinue the downtrend in the coming time because of abundant supply in the market. Average office rent at all grades and in all districts in the 1st Quarter of this year fell 3% from the previous quarter and 11% year-on-year. The office market recorded an average rent of US$61sqm for Grade A, US$29sqm for Grade B and US$22sqm for Grade C buildings. The decline in office rent could be attributed to an increase in supply. The 1st Quarter of this year witnessed total supply in HCMC's office market increasing by 5% with some 42,000sqm added taking the total to around 838,000sqm in 138 office buildings of all grades in the city, with 54% in District 1 alone. Office take-up was about 39,400sqm and the ma¬jority of office transactions occurred for small space generally below 100sqm. Grade B still holds a strong pref¬erence for both new entrants and existing tenants. The average occupancy for all grades achieved 89% however vacancy will increase as more products come onto the market this year with an additional supply of 315,000sqm by the end of this year, half of which comes from 3 notable projects : Vincom Tower, Bitexco Financial Tower and A&B Tower. SGT

190410-Vincom Centre will put 80,000sqm of Grade A office space in the market. It and the Bitexco Fi¬nancial Tower will be the major sup¬pliers of Grade A space in the next 12 months. Rent for Grade A space contin¬ued to soften in the 1st Quarter to $39.6/sqm, a quarter-on-quarter fall of 2% and 31% yoy. As a result, vacancies declined to 15.6% from the previous quarter's 19.9%. VNN

030510-There will be a spurt in the supply of office space in the second quar¬ter with an expected 11 new buildings with 98,000sqm set to open then. In the 1st Quarter, 1No. Grade B & 7No. Grade C buildings opened as total sup¬ply increased by 5%. HCMC has a total of 138No. office buildings of all grades, with a total area of around 838,000sqm. District 1 accounts for 54% while Tan Binh, ranked second after District 1 has 17%. The average rent across all grades and districts edged down by 3% QAQ and 11% YOY to to $30sqm. The average occupancy rate remained stable at 89% even though around 42,000sqm of space was added to the mar¬ket during the quarter. However, the majority of of¬fice transactions involved small spaces of below 100sqm. Grade B buildings were the most sought-after by both new en¬trants and existing tenants. Half of the 315,000sqm of new supply this year will come from three major projects - Vincom Tower, Bitexco Finan¬cial Tower and A&B Tower, all in District 1. District 7 will become a new business hub, contributing around 250,000sqm, or 20% of all incremental supply. This would see it take second spot in the city in terms of sup-ply behind District 1. In the first 2 months, 35 for¬eign direct investment projects were licensed with a total capi¬tal of $325 million. Real estate accounted for nearly 60% of the total amount. VNN

150610-Dragon Fly Corporation have opened a Grade B office with 12-storey at 60 Nguyen Dinh Chieu in District 1 with 4,400sqm at rents starting from US$20-$23/sqm. About half the spaces have been booked in advance. The corporation also owns Capital Place on Thai Van Lung and Empire Tower on Ham Nghi 2 serviced ¬apartment buildings. Because of the abundant supply in the market office rents have dropped 30%-50% compared with nearly 2 years ago. Approximately 40,000sqm of space was taken up in the first 3 months of this year. Total Grade A stock remains at around 106,000sqm with rents ranging from US$35-S$50++ sqm. Mean¬while, Grade B office stock remains at around 351,000sqm with rents ranging from US$18 to US$25++ sqm. In 2010 there is significant new supply of around 350,000sqm from buildings such as Vincom Center and Bitexco Financial Tower. New demand is forecast at 100,000-¬150,000sqm and Grade B and C will continue to be stable. Grade A rents should continue to fall to a sustainable level of US$30-$35++ sqm. SGT

200610-Hanoi and Ho Chi Minh City are report¬ed to have the highest office and accom-modation leasing costs for foreigners in ASEAN countries in a recent annual report in early 2010 by Japan External Trade Organisa¬tion. HCMC rents are around $57 per square metre per month for office leasing. This rent rate is behind only Hong Kong ($72.8), Mumbai ($70.8) and Shanghai ($64.8). However, Ho Chi Minh City has exceeded all other cities in the Southeast Asia, including Singapore with $46.4 and Bangkok with $19.8 per square metre per month. The office rents in Ho Chi Minh City were even higher than other big cities in Asia such as Seoul ($49.8) or New Delhi ($35.8) and equal to Beijing ($57.2).

260610-In the 1st Quarter the average rent for all grades and districts was recorded as $30sqm a 3% quarter on quarter decrease, compared to the 4th Quarter of 2009 and an 11% decrease year-on-year. VIR

Offices for lease : 2010 – Q1
Grade No. Bldgs sqm Occupancy-% Av Rent $/sqm.mth
A 6 100,000 88% 61
B 32 384,000 90% 29
C 100 354,000 87% 22
Total 138 838,000 89% 30

020710-HCM City has a total of 138 old and new office buildings of all grades with space available for lease reaching 838,000sqm. District 1 has the largest space with 54% followed by Tan Binh District with 17%. However, the average rent is about US$30/ square meter/month, down 11% year-on-year. The huge surplus of office space is going to increase to as much as 315,000sqm by the end of this year, mostly in District 1. This district will con-tinue to take the leading position with supply making up 55% of the total, followed by District 7 with 250,000sqm. In the 2nd Quarter of this year, some 11 office building projects were put into operation with a total area of 98,000sqm while the 3rd & 4th Quarters will witness hundreds of thousands of square meters more opened to the market. SGTW

070710-HCMC has 147 office buildings of all grades at the moment, with a total leaseable area of around 952,000sqm, a 16% rise over the previous quarter. Some 11 new office buildings with a combined 129,000sqm began operation in the 2nd Quarter. Vincom Tower, A&B Tower and Bao Viet Building contributed to a quarter-on-quarter increase of 20% in the supply in District 1 and helped the downtown area retain its biggest market share of 57%. In spite of more supply, the average office rent for all grades and districts stood at US$32sqm, inching up 5% from the first quarter. The rate for Grade B offices grew up to 14% quarter-on-quarter. The company said the office occupancy of 88% did not vary much quarter-on-quarter although 129,000sqm of new space of all grades came online in April-June. The major¬ity of office transactions occurred for small space, usually below 100sqm, with Grade B still being a favorite option for existing companies as well as new investors who are keen on business in HCMC. Some 20 office buildings with a total of 153,000sqm would be available in the market by the end of 2010. SGT

100710-The office market across all grades, saw an increase in gross floor area (GFA) of 9.6% during the 2nd Quarter thanks to nine new buildings contributing 124,584sqm. Vincom Centre alone repre¬sented almost 76,000sqm. With companies unwilling to pre-let speculative develop¬ments, the addition of Vincom Centre resulted in a jump in Grade A vacancies to 31.9%. By contrast, Grade B mar¬ket saw the vacancy rate decrease to 10.3%, despite the addition of 2 new build¬ings which provided 25,600sqm. Absorption continued to be strong and improved signifi¬cantly on Q1. The 2nd Quar¬ter saw 72,726sqm of absorp¬tion, bringing the total in 1st Half of 2010 to 130,739sqm, close to the 154,458sqm ab¬sorbed in the whole of 2009. Given the arrival of Vincom Centre and the promotional rates that were offered to the rental rate for Grade A buildings de¬creased to US$37.51sqm from $39.60 in the 1st Quarter. This increase in space and de¬crease in rental prices was re¬flected in the Grade B and C of-fice markets which saw rental rate decreases of 7.95% & 3.12% respectively. By the end of 2010, the office market is ex¬pected to receive about 20 of¬fice buildings with total 153,000sqm. District 1 is still the economic centre of the City, so occupancy accounts for the highest market share at around 49%. Dis¬trict 7, especially, Phu My Hung Area, has invested heavily in infrastructure and the population has strongly increased, resulting in an expected 20% in¬crease of office demand. VNN

140710-HCMC saw an increase in GFA of 9.6% during the 2nd Quarter across all grades from 9 new buildings which provided 124,584sqm GFA. The most significant of these buildings was Vincom Centre, which provid¬ed 75,924sqm GFA making it the largest office building in the city. Absorption continued to be strong and improved significantly on the amount seen in the 1st Quarter. The 2nd Quarter of 2010 saw 72,726sqm of absorption. Absorption for the 1st Half of 2010 stood at 130,739sqm compared to 154,458 sqm in the whole of 2009. VIR

070810-A report for 2010's 2nd Quarter of Ho Chi Minh City's office market across all grades saw an increase of 9.6% in GFA during the quarter. The increase it office space was a reflection of the new buildings coming onto the market which provided 124,584sqm GFA, raising the city's total office supply to 1.4 million sqm. During the second quarter, Grade A rents were $37.5/sqm, 5.34% decline quarter-on-quarter, while Grade B rents posted at an average of $19.28/sqm dropping further 7.95% quarter-on-quarter. VIR

090910-Some 20 office buildings or more will be completed by the end of 2010 adding another 153,000sqm of supply. SGTW

220910-The 68-storey Bitexco Financial has leasing commitments of about 22% of the project's total office space. Rents at the tower were $45sqm on average based on the net internal area which equated to $37.5 per square metre on the gross area. This was in the middle of the current range for Grade A build¬ings, which stood between $32-$42. The tower's investment capital was originally $120 million, but ballooned to $180 million after being audited. The figure climbed to $240 million as a result of plummet¬ing inflation and escalating material prices in 2009 and was recently estimated to stand at $270m upon completion. VIR

121010-Office rent dropped some 3% compared to the 2nd Quarter since property owners were anxious about the risk of oversupply. The market witnessed asking rents in Grade A office segment dropped 3% to US$57, Grade B was down 2% to US$33 and Grade C also fell 2% to US$22sqm per month. However, average occupancy remained stable at 85% thanks to the arrival of new tenants and a shift from private houses to professionally-managed buildings. Oversupply and competition would continue to drag down rents and occupancy across all the three grades. Grade A office buildings are wait¬ing for a new wave of FDI inflow, while Grade B and Grade C buildings depend much on the health of domestic investment. The city's office market has 154 office buildings at all grades, offering nearly a million sqm of office spaces, with Grade B office more dominant with a 50% market share. SGT

211010-Total net absorption during the 3rd Quar¬ter was 62,110sqm net lettable area (NLA). Although this is slightly lower than the 2nd Quarter, year-to-date net absorp¬tion was 194,201sqm NLA, more than the entire 154,458sqm net absorption seen in 2009 and it is anticipated that the office mar¬ket will absorb up to 220,000¬-250,000sqm in 2010.

281010-Bitexco Financial Tower’s will join the market with some 37,000sqm of Grade A office spaces and some 8,000sqm for retail space. That commitment-to-lease tenants have filled up some 40% of the total office space in the building whose rents are offered from US$44 to US$64sqm. Retail rents are offered from US$78 to US$124sqm. During the 3rd Quarter, office rents were recorded from US$35 - US$55sqm for Grade A, US$20 - US$30 for Grade B and US$10 - US$15 for Grade C offices. With over 1.4m sqm of existing office space across all sectors in the city, a further 2m sqm under construction expected to come on line over the next 5 years. SGT

231110-IPC Tower is a $11.3m 21-story office in Phu My Hung supplying 14,200sqm of Grade-B office space by Tan Thuan Industrial Promotion Co with rents ranging from US$18-20/sqm. SGT

231110-There is some 1.4m sqm of existing office space across all grades in HCMC, and a further 2m sqm under construction or under planning and will come on line over the next 5 years. Office rents have dropped by half since the peak in 2008 when the market saw Grade A office offered at US$100sqm. Rents recorded in the last quarter ranged from US$35-55sqm for Grade A, US$20-30/sqm for Grade B and US$10-15/sqm for Grade C. The market saw vacancy at 15% in the last quarter. However, the absorption rate increased significantly compared to last year. Net absorption in the first 9 months of the year was recorded at some 194,000sqm, more than the entire 154,500sqm net absorption seen in 2009. SGT

050111-Current monthly asking rents across the grades are in the following ranges for most buildings (base rent only excluding management charge and VAT per square metre): Grade A - $30-$40, Grade B -$20-$30 and Grade C $20. As at the end of the third quarter 2010, the Ho Chi Minh City office market had just under 1.5 million sqm of office space split (Grade A - 241,000sqm, Grade B - 585,000sqm and Grade C - 655,000sqm) with overall vacancy at around 15 per cent. The next 24 months will see another one million square metres come online so that by the end of 2012, total supply could be around 2.5 square metres. Positive absorption for the first three quarters of 2010 at 194,000sqm and so if this continues, total absorption for the year could reach around 250,000sgm. The medium term outlook for rents is still fairly cloudy as even with 2.5 million square metres, Ho Chi Minh City office market is less than half of other regional centres. VIR

190111-Offices for lease in HCMC saw the vacant ratio exceeding 17.8% in the 4th Quarter of 2010. The city had nearly 227,000sqm of office for lease last year, up 50% from the previous year. SGT

240111-Some 214,000sqm of Grade A office space, over 134,000sqm of it occupied, and with another 80,000sqm available for leasing, the Grade A market is experiencing competition not from existing Grade A stock but from new Grade B buildings. Grade B buildings are offering good facilities in key locations with lower rent rates but more incentives, thus placing downward rent pressure on the Grade A supplier. The average rent for Grade A, as of the end of the 4th Quarter of last year, was around US$40sqm. However, this month the average rate has dropped to US$36sqm with occupancy of about 80%. The downward pressure from Grade B buildings, with average rent between US$20-30sqm is forcing Grade A rent down. But the level has not reached US$32.55sqm as seen in late 2005, when the market was in the upswing. The total net absorption for 2010 was some 227,000sqm, some 50% above the 155,000sqm of net absorption recorded in 2009 with 2011 to grow with some 250,000sqm expected across all grades. It is expected to see 280,000sqm of office space join the market in 2011 and some 1.1m sqm come on stream in the next 3 years. It is projected the Grade A office rents would come down to the same levels as other regional citiep such as Shanghai and Beijing with US$31-33sqm. SGT

150211-HCMC will have additional an 560,000sqm of office space within the next 2 years. Demand for office space in districts 4 and 7 will rise. SGT

160211-HCMC of¬fice market saw monthly rent continue dipping last year. This hit developers who were fighting for tenants through a range of incentives. The average asking rent for the office sector in the last quarter was about US$35sqm for Grade A, nearly US$19.5sqm for Grade B and around US$16sqm for Grade C. The market re¬corded a total net absorption of some 227,000sqm last year, some 50% above the 155,000sqm recorded in the previous year. The absorption is expected to continue to grow to 250,000sqm across all grades this year. It is expected to see another 280,000sqm of office space available on the market this year, and a further 1.1m sqm will come on stream in the next 3 years. SGT

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