The downturn in the real estate market has created huge opportunities for office tenants, according to real estate services provider Savills Vietnam.
As a result of rapidly diminishing demand and increasing supply, the office market is in decline and has had a significant impact on rental values.
In HCM City, at the market's peak in 2008, grade B buildings were demanding rents of US$65-75 per square metre. They are now being marketed for $30-35, with room for further negotiation.
"An increase in supply and a decline in demand have meant that developers have had to start offering competitive rentals and large incentives to encourage new tenants and retain existing ones," Robert MacDonald, head of tenant representation and advisory services at Savills Vietnam, said.
"It is clear that tenants who have rent review or lease expiry provisions within the next 18 months will be able to benefit greatly from the prevailing trend as they will be able to negotiate aggressively with either their current or future landlord. This clearly was not the case 12 months ago when landlords still held significant influence over the market.
"We advise all companies to take advantage of the current situation by reviewing their operational costs, reassessing their future real estate needs, being creative in establishing how to minimise their overheads, and most importantly, ensuring that they are fully briefed on the market so that they arc entering negotiations in the strongest position possible." Office rents in the short to medium term would see further decline, he added.
The total supply of office space in the city in 2011 is set to grow more than 120 per cent compared to the end of 2008 (910,000sq.m).
As a result of rapidly diminishing demand and increasing supply, the office market is in decline and has had a significant impact on rental values.
In HCM City, at the market's peak in 2008, grade B buildings were demanding rents of US$65-75 per square metre. They are now being marketed for $30-35, with room for further negotiation.
"An increase in supply and a decline in demand have meant that developers have had to start offering competitive rentals and large incentives to encourage new tenants and retain existing ones," Robert MacDonald, head of tenant representation and advisory services at Savills Vietnam, said.
"It is clear that tenants who have rent review or lease expiry provisions within the next 18 months will be able to benefit greatly from the prevailing trend as they will be able to negotiate aggressively with either their current or future landlord. This clearly was not the case 12 months ago when landlords still held significant influence over the market.
"We advise all companies to take advantage of the current situation by reviewing their operational costs, reassessing their future real estate needs, being creative in establishing how to minimise their overheads, and most importantly, ensuring that they are fully briefed on the market so that they arc entering negotiations in the strongest position possible." Office rents in the short to medium term would see further decline, he added.
The total supply of office space in the city in 2011 is set to grow more than 120 per cent compared to the end of 2008 (910,000sq.m).
Vietnam News
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