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Office space rentals crash in HCM City   2009-04-02 - Viet Nam News

Office rents in HCM City have plunged by up to 50 per cent and the trend is tipped to continue as belt tightening and office construction ensure that supply far outstrips demand.

Foreign real estate companies Cushman & Wakefield, Savills and CB Richard Ellis said top quality office space rents had fallen from a peak at the beginning of last year of US$70 per sq.m to $43 this year and could go as low as $30.

Rents for second-class space had fallen from about $45 per sq.m to $28-40 and third-class office space from $39 to $14-25.

The rents did not include service fees and VAT.

CB Richard Ellis managing director Marc Townsend said clients would soon start to demand preferential treatment, including better parking, signage and decor.

He said office demand was closely linked with employment and financial stability and firms were tightening their belts, cutting jobs and also cutting costs on office rents.

They were assisted in this regard by an increase in vacancies and 1.25 million sq.m of new office space, predicted to come into the market this year, adding to the downward pressure on rents.

Cushman & Wakefield, a private real estate firm based in the US, predicted leases of first-class office space would fall below $30 a sq.m.

Customers were paying $40 per sq.m in the centre of the city, $30 in the outskirts and $20 near Tan Son Nhat International Airport, the firm said.

The figures were published following a survey in the final quarter of last year.

Savills, a foreign-owned real estate firm in Viet Nam, said construction in the south had slowed significantly with only 930,000 sq.m of office space under construction till 2012.

Vinaconex Investment and Tourism Joint Stock Company general director Tran Ngoc Quang said the office investment market was gloomy and a recovery was difficult to forecast in light of the financial crisis.

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