Bangkok--Aug 17--CB Richard Ellis
CB Richard Ellis Vietnam recently published a report on Hanoi Property
Market for the second quarter of 2005. The findings of this report provided an
overview of supply and demand in Hanoi Property Market, which outlined the latest
rental trends in the office and retail sectors.
Hanoi Office Market - New Supply, Demand & Vacancy
At least two Grade A and 32 Grade B and C office developments, with
a total aggregate gross floor area of approximately 130,000 square meters, are
currently under construction in Hanoi. The projects that are slated to come on
stream in the final quarter of 2005 and during 2006 onwards include Pacific Place,
VIT Tower, Opera Business Centre, Hacinco Tower and Devyt Tower.
A number of factors including the growing rate of foreign direct
investment into Hanoi and increased expansion of multi-national corporations,
diplomatic missions and non government organizations are effectively boosting
demand and serving to drive the Grade A and B office market in Hanoi.
Grade A and B office space in Hanoi was almost fully occupied within
the second quarter as a result of limited supply and robust demand. It is
interesting to note that of the 80,395 square meters of office space that came
on stream in 2004, nearly 100% has been taken up.
Rental Trend
Average asking rents of Grade A office space in Hanoi’s central business
district were registered at US$26.00 per month in the second quarter of 2005
(inclusive of service charges ranging between US$5.00 to US$8.00 per square meter
per month).
Average asking rents of Grade B office space in Hanoi were registered at
US$19.00 per month in the second quarter of 2005 (inclusive of service charges of
approximately US$5.00 per square meter per month).
The tightening of Grade A and B office supply currently witnessed in the
Hanoi office market is being further exacerbated by the emergence of demand from
local Vietnamese companies, conscious of the benefits that a prime office address
brings to the corporate image.
With Grade A office occupancy in Hanoi hovering around 100% and demand
on the rise for top quality space it is forecast that rentals will increase by
between 10% and 15% until the group of new Grade A office buildings which are
currently under construction are completed and come onstream at the end of 2006.
Market Outlook
New supply of office space in the Hanoi market for the remainder of the
year, is slated at around 20,000 square meters and is limited to Grade B office
space located outside the central business district. Meanwhile no Grade A office
supply is expected to be released onto the market until the first quarter of 2006.
Some office building projects are presently under construction and will be
completed in 2006 and 2007, providing new supply of gross floor area of
approximately 110,000 square meters.
In the run up to the completion of these projects, market rents are
expected to experience further appreciation of between 10% and 15%. Yet, while
rental levels for centrally located office are expected to rise over the next
2 to 3 years, we may witness an element of rental compression following the
release onto the market of a relatively large quantum of new supply in the Grade B
sector that has in recent months experienced a quick take up of space after launch.
Major Transactions in Q2 2005
Property District Area (square meters) Tenant
Vincom City Towers Hai Ba Trung 568 Embassy of Ireland
Vincom City Towers Hai Ba Trung 340 Nokia
Vincom City Towers Hai Ba Trung 260 Sony
Vincom City Towers Hai Ba Trung 510 Nortel Networks
Vincom City Towers Hai Ba Trung 800 Norgian Embassy
Vincom City Towers Hai Ba Trung 257 Cisco
For further information:
Mr. Richard Leech
CB Richard Ellis
Vietnam
+844 2200 220
Ms. Ngamjai Jearrajarat
Corporate Communications Manager
02 654 1111 Ext. 522 End.