C&W upbeat on property trends
C&W upbeat on property trends
Vietnam’s real estate market appears to still be enduring a difficult period but there are encouraging signs that suggest the bottom of the market has arrived, said real estate firm Cushman & Wakefield.
“The Vietnamese government has successfully stabilised the macro-economy. However, this must be tempered with a note of caution as a shock rise in inflation could ruin this emerging confidence,” said Jonathan Tizzard, national head of research and valuation at Cushman & Wakefield Vietnam (C&W).
The bottom line of the real estate services firm’s report for the third quarter of 2013 was that they believe the bottom of the market cycle to have arrived. However, C&W Vietnam general manager Chris Brown acknowledged that it was difficult to verify this with certainty.
In the office sector in Ho Chi Minh City, the average asking rent of Grade A decreased by almost 5 per cent quarter-on-quarter, and 7 per cent in comparison with the same period in 2012, to stand at around VND960,000 ($45.6) per square metre per month, according to the report. Grade B rents also continued their downward trend, decreasing by around 1 per cent quarter-on-quarter and by some 8 per cent year-on-year, standing at VND523,000 ($24.8) per square metre per month.
Tizzard commented, “The Ho Chi Minh City office segment has reached the bottom and improvements have already started to show; a busy final quarter in terms of leasing activity is expected, paving the way for a recovery in the office market in 2014. Tenants are urged to secure competitive lease terms before the market turns.”
In the third quarter of 2013, the Hanoi office market saw no new supply entering the market. In comparison with the second quarter, asking rents for both Grade A and B went down by 0.5 per cent and 2 per cent, respectively.
It is forecast that the average rent for all grades is likely to follow a downtrend in the coming time due to high vacancy rates in existing office buildings, said Tizzard.
In the retail sector, the report said about 90 per cent of Hanoi shopping centres were occupied in the third quarter, a 1 per cent fall from the second quarter. Occupancy rates of shopping centres in Ho Chi Minh City decreased by 1 per cent quarter-on-quarter, reaching 85 per cent while remained stable for retail podiums, at 97 per cent.
Tizzard said rents remained unsustainably high in many fringe locations and a correction was needed in order to attract tenants and increase absorption rates. However, the core business district’s retail markets in Hanoi and Ho Chi Minh would keep performing well.
Brown elaborated that world-renowned fashion brands would not leave the core business district due to high rents because they had to maintain their image and presence.
He added his company was working on a deal for a world famous fashion brand to enter Vietnam, but declined to reveal its name, when it would enter or its possible location.
In the industrial sector, the supply of industrial parks (IP) in Hanoi had a total of land lease availability of about 474 hectares, up 3 per cent compared to the second quarter. This third quarter witnessed a slight reduction of 1 per cent in rental rates compared to the second quarter at nearly VND2.25 million per square metre.
In the apartment sector, the report claimed that the oversupply continued in the third quarter. However, developers are exploring new ways of enticing customers and the government remains committed to helping this sector.
The firm said the rest of 2013 and early 2014 was expected to remain a buyers’ market across the residential sector. Given the recent proposed regulations of the Ministry of Construction expanding the right for foreigners to own property in Vietnam, and the increasing credit growth, it is expected the market could warm in the medium term.
Brown added that the beginning of the transferring of non-performing loans to the Vietnam Asset Management Company would boost confidence in the market place.
vir
