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Da Nang luxury offices find few takers despite great expectations   2008-09-19 - VNS

The tall expectations of developers in the central city of Da Nang have been belied with at least 10,000 sq.m of high-end office space lying vacant for several months.

A host of "luxury" office complexes had sprung in the city over the last few years as developers prepared for the expected influx of foreign and domestic enterprises.

However, the global economic and market crises and their domestic fallout have rendered the real market very sluggish.

The Indochina Riverside Tower (IRT), which stands on the most prime of locations in the city, typifies the trend.

The US$27 million complex consists mainly of high-end offices. Three months after its opening, only 40 per cent of its space is leased out at between $17 and 21 per sq.m per month.

IRT general director Ho Quang Dung says the quality and facilities offered by IRT are similar to upmarket offices in Ha Noi and HCM City, but are priced at one-third of the rates at the major cities.

Dung says that "one year ago, it was predicted that there would be many foreign and domestic investors flocking to the city to do business. However, economic harships have prevented this.

"We are looking for suitable and affordable customers.We have no intention to cut the prices but will focus on improving service quality."

The Hoang Anh Gia Lai office building began offering 4,500sq.m of office space for lease at $15 per sq.m/month a year ago, but it still has a lot of space lying vacant.

Six months after Green Plaza Da Nang, a VND220 billion, 18-storey complex put 5,200sq.m of high-end offices on the market at $18 and 35 per sq.m/month, just 30 per cent of the space is occupied, says director Le Quang Triet.

"We plan to offer preferential policies for renters including a reduction in services-related charges," Triet says.

Many other office complexes share the same fate, including the Vinh Trung Plaza, EVN Da Nang, Thien Kim and Savico.

Some companies had even planned to open stock exchange transaction floors, and branches of bank and insurance companies in Da Nang early this year, but have had to put these on hold.

New projects go ahead

While the local office market is very lethargic, several office building projects are continuing to be built in the city.These include: the 40-storey Golden Square of the Dong A Real Estate Joint-stock Company; a 30-storey building owned by VinaCapital; the 35-storey Danang Center; the 30-storey Han Riverside of the Vu Chau Long Property Company; and the 48-storey Viendong Meridian of the Vien Dong Technology Transfer and Investment Consulting Company.

Project owners expect the market gloom will lift soon, and demand for office space will rise again, vindicating their investments.



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