The Ho Chi Minh City office building market has slumped withlandlords struggling to find tenants due to falling demand and hugesupply coming into the market.
Even buildings that used to have a long waiting list are now struggling to find tenants.
Me Linh Point Tower, for instance, is posting on the real-estate websites. It has for long been one of the very rare office buildings in the city with a zero vacancy rate.
The low occupancy rates are also worrying owners of existing office buildings since tenants tend to leave after their lease ends to new places with lower rents.
New buildings such as Vincom Center, Bitexco Financial Tower, Green Power, and Maritime Bank Tower find it even harder to attract tenants.
A survey by real estate consultancy CB Richard Ellis (CBRE) found that grade A buildings had the highest vacancy rates of 34.2 percent in the last quarter.
Adam Bury, senior manager at CBRE, said the demand for office space was in decline.
He said only 67,000 sq.m of office space was leased in the first half, down by half year on year.
Analysts blame it on the continuing economic woes.
But despite the falling demand, supply of office space for rent surged in the second quarter and is forecast to continue rising.
Six new office buildings with around 38,000 sq.m entered the market in the period, taking supply to 23 percent higher than a year earlier.
More are under construction, with Times Square, Saigon M&C, Vietcombank, and SJC Tower coming up in just the downtown area.
The analysts warned this would cause a surplus and put even more pressure on landlords to cut rents and offer incentives to get tenants.
Minh, a property agent, said office rents had plunged in recent years.
“The rent for a grade A building in the downtown area is only US$34 per square meter per month, and this price can be lowered if you lease a large space,” he said.
Tuoi Tre discovered that grade A office rents could slip to just $30.
Some office buildings, including grade B and C ones, are offering incentives to tenants like deferring or waiving advances and parking fees and accepting late payments.
“Some even waive several months of rent to cover [tenant’s] internal decoration expenses,” Dong, employee of a company that has just moved to a new office building, said.
Tuoitre