Foreign firms get back into office market

No new foreign office towers have opened in the city for five years

Although most developers have shown strong interest in lucrative residential developments, a few others are mulling schemes to build high-rise office blocks in the city where no foreign-backed office space has come onto the market in the past five years.
A joint venture between New World Hotels Holdings Hong Kong and Saigontourist Holding Company, which built the 560-room New World Saigon Hotel, now wants to branch out into the office leasing business.
The joint venture is currently pondering a plan to build an office building of 25 to 35 floors on 1,850 square metres near its hotel for $25 million, according to a New World senior executive.
Another foreign-backed development is slated for District 1 as Ben Thanh Tourist, Vietcombank and Hong Kong’s Bonday Investments have signed a joint venture contract to build a 35-storey office block for $55 million.
When complete in late 2006, the building will provide 77,000sqm of office space for lease, including retail and restaurant outlets near Me Linh Square. Vietcombank would lease 10 floors of the building for its offices.
“The development would be effective economically as it is located near the commercial and financial area in second city that would lure big multi-national companies to lease space,” Vietcombank deputy general director Nguyen Phuoc Thanh said.
Hong Kong’s Vietnam Land, which built Sunwah office tower, has expanded its business and entered into a joint venture with a local company to build four office blocks of 13 to 25 floors as part of the massive $156 million Saigon Pearl residential development.
`Other local developers have set their sights on two properties in District 1, including two 39-storey residential, office and retail towers developed by Savico, and an $18 million office building in Le Thanh Ton street, bankrolled by shipping company Gemadept.
Peter Dinning, general director of property company Dinning and Associates, said many new projects had been planned.
“But, I know only one will start construction soon,” said Dinning. No new large office buildings have opened in Ho Chi Minh City in the last five years except Bitexo and e.Town, which are both owned by local developers and recording high occupancy.
Real estate agent Chesterton Petty has forecast that new office supply in the second city would be particularly constrained next year with only 5,500sqm in new space compared to 27,500sqm this year and 32,900sqm in 2006.
Ho Chi Minh City has some 240,000sqm of office space available for rent and average occupancy is 90 per cent.
The average monthly rent has picked up from the record low of $14.70 per square metre at the end of 1999, to $20.70 this year.
A CB Richard Ellis survey from early this year showed Grade A office space in the second city was the fifth highest in Asia, at around $28 per square metre per month.