Capital’s office market door closed

Many of Hanoi’s big office developments have the reputation of being white elephants

The 54,000-square-metre Grand Plaza tower in Hanoi’s west came online in the middle of last year, but just seven of the building’s l7 floors dedicated to office leasing are currently occupied.

According to Grand Plaza’s office managing director Hoang Ngoc Thuc, the management was hoping to woo customers by scaling down rental and service fees in the first three months of leasing contracts. In this way, it hoped to counteract the impacts of the bleak market.

The situation is no better at BIDV Tower which is on prime real estate in the heart of Hanoi on Tran Quang Khai street. The office tower came on stream in early 2010, but several thousand square metres of space stand empty.   

The director of a communications firm located in the tower said scores of firms had moved from the tower during 2010 and 2011 on the back of tough business climate. “I’ve never experienced such a lacklustre ambience in the tower,” said the director.

Similarly, the 17-storey Seabank building in Dong Da district has seen its rental sliding to just $23 square metres per month (service fees included). Only four retail floors are fully occupied – mostly by electronic and machine-electrical stores. Office space from the sixth floor upwards is almost empty and gathering dust.

And it’s not just property firms which are feeling the pinch. Public office blocks are also struggling. Hanoi Intellectual Palace, which opened during the celebrations for 1,000 years of Thang Long-Hanoi in late 2010, is almost empty.

The venue comprises three  16-storey buildings, and offers around 16,000sqm space in Cau Giay urban area. The venue has space for 1,500 employees and could accommodate a library room, a convention hall, and canteen areas.

However, one year after inauguration just few tenants have climbed on board. Office leasing oversupply has put property developers in a fix. Experts predict 1.2 million square metres of office leasing area could come onto the market over the next three years. With so many firms going out of business at the moment, there could be a whole lot more empty corridors in the near future.