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While CBRE and Savills expected that the office for lease rents and occupancy rates would be stable and then rise, the consultant realty company Knight Frank predicted that a downward trend would continue to characterize the market.
Knight Frank Vietnam’s latest report said that although most enquiries for office space emanated from the Grade B segment of the market, rental rates still decreased slightly to VND438,000 ($21) per sqare metres per month in the final quarter of 2012.
Rental rates are expected to continue to come under pressure with the addition of new Grade B stock that are planned to be completed in the first half of 2013, including the 33,000sqm Lim Tower and the 26,000sqm HTMC office building, which are both located in the second city’s District 1, according to Knight Frank.
The firm’s researchers commented that the rental rates for the office segment in the Grade A market also would continue to decrease predominately due to restrictions in tenant budgets and the willingness of the landlords to maintain occupancy levels in the existing buildings.
Conflicting with Knight Frank’s assessment, CBRE Vietnam reported that Grade B office rents rose 1.5 per cent quarter on quarter after seven consecutive quarters of declines, whereas Grade A sector shifted slightly downwards, but less than during the previous quarter.
In addition, CBRE showed that mature Grade A buildings such as Kumho Asiana Plaza, Metropolitan, Sun Wah Tower, Diamond Plaza, Saigon Centre, Saigon Tower and Centec were holding firm rents as occupancy levels remained stable over the past 12 months while new Grade A buildings such Vincom Centre saw occupancy rates rising at a healthy level.
In detail, the average asking rent for Grade A office space as at the final quarter of 2012 was approximately VND641,760 ($30.56) per sqm per month and approximately VND362,250 ($17.25) per sqm per month for Grade B respectively. Average vacancy rates for Grade A and Grade B office space respectively were 15.3 per cent and 11.8 per cent respectively.
Based on the database, Greg Ohan, national director of CBRE office service division, concluded that the market continued show signs of a bottom.