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Hanoi office leasing market: Leasers and customers on unfamiliar terms   2009-05-28 - VnMedia

It is estimated that 10 percent of total office area in the capital city remains unoccupied, while a lot of people are seeking offices to lease. Leasers and customers still cannot come to terms because the former does not want to cut leasing fees while the latter does not want to pay the asked fees.


Thu Le, an officer of a media company, said that she is seeking a 500-600 sq m office to lease at $20/sq m. A tower on Kim Ma street is asking $18++ per sq m However, this does not include tax and service fees.


As such, the actual fee for leasing offices in the tower is around $25. Moreover, lessees have to pay $80 a month to keep a car, and $8 to keep a motorbike.


“This is really an overly high fee, while the quality is bad. The parking area is narrow. Meanwhile, our divisions would be put on different floors,” she said.


Real estate experts in Hanoi say that demands similar to Le’s are now very common in the market. People always want to lease offices at just $20-22/sq m, but they always want offices in towers with perfect services.


Most customers think that they can pressure leasers so that they can lease offices at the lowest possible fees. However, leasers are demanding no less than $35/sq m for offices that meet most customers’ demands. The leasing fee proves to be the same as last year’s level. In some cases, leasers set higher fees, even though there are still many offices available.


Pham Duc Toan, Director of EZ Vietnam, said that his company was very surprised by the requirement of one client. The client wanted to move from his 60 sq m office in a tower in an advantageous position in Hai Ba Trung district to a 100 sq m office in Hoan Kiem district but demanded the leasing fee not change.


“We cannot satisfy such a demand,” Toan said.


According to Savills, a real estate consultancy firm, due to the economic crisis, a lot of real estate projects have been delayed. However, Hanoi will have nearly 200,000 sq m of new offices by the end of 2009, mostly B and C class offices.


The supply may increase to 1.1 million sq m in the next three years.


Previously, many companies were ready to pay $10,000 a month to lease a 300-400 sq m office. However, the economic crisis has forced them to tighten their belts and narrow office space. This has led to the fact that supply has become more profuse.


Demand is now very high, while the supply remains profuse, but demand and supply are not drifting any closer to one another.


While in HCM City, investors of a lot of office towers have decided to slash leasing fees by 50 percent (the leasing fee is just $40-50 for A class offices) in order to lure more clients, investors in Hanoi have been trying to keep leasing fees high. In some cases, they accept leasing fee decreases, but the decreases are not higher than 20 percent.


In Hanoi B-class offices in advantageous positions in Hanoi are still offered at nearly $40 per sq m, while C class offices on Mai Hac De, Le Dai Hanh and Pham Hung roads have seen the modest leasing fee decreases of $3-5 per sq m.

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