No office space relief

October 31, 2007 | 18:30
(0) user say
With no new buildings coming online in Hanoi until 2009, no relief is expected on the supply side of Grade A office space in the near future, while there is a slightly change in the field of retail, according to a report released last week by property agency CB Richard Ellis.
Retail
The Hanoi retail market saw changes this quarter as KFC opened its fourth location and Metro Cash & Carry opened its second location in Yen So Park. Lotteria, a Korean fast food giant, has also set up its second store in Hanoi in the last quarter.
The opening of Pacific Place and the Opera Business Centre created a mere 2,300 square metres of new retail space. High rental rates ($60sqm) and an excellent position in the city attracted mainly luxury brands, and neither site had trouble leasing out space. In the first quarter of 2008, approximately 18,000sqm of new retail space is expected to become available as the Viet Tower and Thai Thinh Plaza come online. Parkson has already leased out Viet Tower’s seven floors. Most other major retail areas will not open until 2009 or later.

Offices
The office market in the third quarter of this year has not changed much compared to the second quarter. Occupancy rates in Grade A and B office buildings still hover near 100 per cent.
The newest Grade A buildings, Pacific Place and Opera Business Centre, are already at 100 per cent occupancy.
The Manor added 6,000sqm of office space for the Grade B sector, the only new space launched in Hanoi last quarter.
Demand for quality office space is increasing as more multinational companies enter the market and local Vietnamese firms look to upgrade their offices. However, net rental rates do not yet accurately reflect this demand. In the last quarter, Grade A office rental rates rose by 1 per cent and those in Grade B rose 5 per cent compared to the previous quarter.
By the end of this year, two Grade B office projects will come online, the Kinh Do Building (on Lo Duc street) and the No.9 Dao Duy Anh Street Tower (11,000sqm each). In 2008, Grade A office space will not see any new growth, but Grade B offices will see the introduction of the Viet Tower (over 13,000sqm) on Thai Ha street and Sun City (approximately 6,000sqm) on Hai Ba Trung street.

Residential
For the serviced apartment market, no new projects opened this quarter and vacancy rates remained low at around 5 per cent. However, vacancy rates rose slightly from the previous quarter, particularly as the take up rate for the new DMC Tan Long has been slow in the last quarter, and Sedona Suites has taken some of its units back for renovation.
The fourth quarter looks to end the year on a high note as over 500 new serviced apartment units come online in four separate projects (Somerset Hoa Binh, Fraser Suites Hanoi, Skyline and Atlanta). In the residential for sale market, the condominium market appears strong with units becoming available at a steady rate over the next few years. Local developers dominate the market in small and medium projects, but a number of very active Japanese and Korean developers have recently entered the market.

Hotels
In five-star hotels, the average occupancy rate remains high at 74.35 per cent (79.69 per cent in four-star) and the average room rate increased slightly to $124. Demand remains high and no new hotels were built from 2005 to 2007. The Sofitel Metropole has converted office space into 70 new five-star rooms, but other than these units, no new four or five-star hotels will be finished until 2008. In 2008, the five-star Inter Continental will open with 327 rooms. By 2010, the four and five-star hotel market is expected to grow by 3,700 rooms.

vir.com.vn

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional