HCMC Rentals Hit by Lower Demand

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May 12 – Office and serviced apartment rentals have been dropping in Ho Chi Minh City during the first quarter of the year because of continuing weak demand brought by the economic downturn, reports real estate services firm CB Richard Ellis (CBRE).

For Grade-A buildings, rents have plunged by 20 percent to an average of US$57.30 per square meter monthly for the ground floor.

CBRE said that total absorption decreased by 45 percent quarter-on-quarter and 85 percent compared to the previous year. There are approximately 34 office Grade A and Grade B buildings in the city with a built up area of around 390,000 square meters.

Slowing foreign investment in the city has directly affected office rent and occupancy. Townsend told Thanh Nien News: “Some Grade A landlords are offering discounts of up to 30 percent on asking rents. The rates are likely to fall much lower to an average of $30-40 per square meter per month by the end of 2009.”

It is expected that a price war between Grade A and Grade B rental markets will only escalate as more new buildings join the rental market in the second quarter like the Crescent Plaza, Asiana Plaza, Centec Tower and CentrePoint, expanding the market by about 98,000 square meters more.