New developments put the heat on landlords.
Average rental prices in Ho Chi Minh City's office market for both Grade A and Grade B spaces have remained unchanged on both a quarterly and yearly basis, at around $46.80 per square meter per month for Grade A and $27 per square meters per month for Grade B, according to the latest report by Cushman & Wakefield Research.
It is forecast that rent will continue to soften in 2015 with good quality buildings entering the market. Vietcombank Tower will increase Grade A inventory by approximately 25 per cent putting significant pressure on a sector which has experienced lower take up over the past two years.
In Hanoi, no more new Grade A offices are forecast for 2015, but plenty of Grade B supply is expected. The office market will continue to face oversupply this year due to a significant number of office projects currently in the fitting out stage, especially in the western part of the city. Therefore, a decline in rentals is expected to continue and will be of considerable concern for landlords. There is expected to be around 715,000 square meters of office space across all grades coming onto the market in the next two years, and thus more opportunities for tenants when choosing office space at a reasonable rate.
Meanwhile, CBRE have revealed that average asking prices for offices in Da Nang have stayed unchanged quarter on quarter and decreased by 4.5 per cent on a yearly basis. Grade B showed the largest decrease of 7.1 per cent while Grade A and Grade C decreased by 5.6 per cent and 3.5 respectively. The downward trend during 2014 was due to the effort of landlords to lower their rent in order to fill up buildings. "Due to limited new supply, the market average rent is expected to remain stable until new projects comes online," said Ms Duong Thuy Dung, Associate Director, Head of Research and Consulting Department of CBRE Vietnam.