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Offices for lease in Hanoi unable to find customers   2008-10-02 - VNE

The Hanoi market of offices for lease has become quiet over the last several months with leasing fees down by 25%. Meanwhile, it is expected that some one million sq m of offices will be put into operation in years to come.


The demand for high-grade offices, of which there was once a shortage, has been dropping considerably. The leasing fee of the best high-grade offices is $66/sq m on average. Hanoi now has 55 A-B grade buildings, with a total space of 375,000 sq m, and have a leasing fee of $30 to $60 per sq m.


In an effort to cut down expenses, businesses now tend to lease medium-grade offices, which have a leasing fee of $20-26 per sq m. Most of the businesses want offices with a space of 200 to 500 sq m, which are located near roads, have lifts and a ground floor for keeping staffs’ motorbikes


Savills, the real estate service provider, has released statistics showing that the high growth rate of offices with a leasing fee of over $30/sq m has been slowing down from 11% to 7% in the first months of the year.


According to Nguyen Thanh Huyen, Marketing Deputy Director of Ha Thanh Company, the office leasing fee has decreased by 25% from the beginning of the year.


“Not many businesses can pay over $30/sq m to lease high-grade offices,” Huyen said.


The leasing fee, though declining, remains unaffordable for many companies. As big difficulties still exist in the national economy, businesses have delayed their plans to expand operations, thus leading to a sharp decrease in the demand for offices.


A lot of businesses are now seeking to lease an office which has a leasing fee of no more than $25/sq m. Many of them have moved from high-grade offices to lower-grade offices, including the ones located far from the centre of the city.


Huyen said that it is not the right time for businesses to halt plans to expand operations or upgrade offices, but to gather the strength to deal with business difficulties. This explains why the office leasing market has been declining recently.


Huyen thinks it will take at least six months for the real estate market to recover.


Savills has estimated that some 1.3mil sq m of offices will be available in the market in the years to come, including 900,000 sq m to be completed prior to the end of 2012. Many of the real estate projects will be located in the suburban areas of the city.


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