HCM City's office market recorded a slight drop in rental rates in the second quarter, according to a report from Cushman & Wakefied.—Photo ĐTCK

HCM CITY (Biz Hub) – HCM City's office market recorded a slight drop in rental rates in the second quarter, according to a report from Cushman & Wakefied.

Jonathan Tizzard, associate director of Cushman & Wakefield, said that Grade A absorption was especially low this quarter, and with the prospect of new space coming on line in the short and medium term, it looks set to remain a tenants' market.

Retail rates were also slightly down over the quarter and a dichotomy has emerged between central business district retail areas with high and stable occupancy levels and secondary/suburban areas that have falling occupancy levels, according to the report.

Rents were also slightly down in the industrial market sector but the more established, older industrial parks have occupancy levels over 90 per cent, with only the new parks in Binh Chanh and Cu Chi District under 50 per cent.

The Sai Gon serviced apartment sector saw Grade-A occupancy fall slightly but rental levels remained stable. Grade-B rents increased slightly but occupancy levels fell over the second quarter.

The oversupply of apartments for sale in the city will also affect the serviced apartment market as more of this latter stock is converted.

Prices continued to fall in the apartment for sale market, and this looks set to continue unless lending conditions improve significantly.

The real estate market has been in decline in Viet Nam for some time now, the report notes. Speculators have left the market for the most part, with end-users the targeted clients across sectors.

"While the general environment is fairly miserable, developers who undertake informed and reliable research and truly understand their markets and adapt their designs continue to sell their product," the report said. In addition, many commentators believe the bottom of the market is nearing, according to Tizzard.

Ha Noi property market

Royal City office project.—Photo royalcity.com.vn

According to the report, rental prices for grade-A office space in Ha Noi remained stable for the second quarter, but grade-B offices saw a 2 per cent drop quarter-on-quarter.

High vacancy rates and a large increase in new stock in the short-term indicate that pressure on rental levels would increase.

Retail rents were stable over the quarter, and with only Royal City office project from the Vincom company entering the market in July, rents are expected to remain stable, according to the report.

The supply of industrial space in Ha Noi remained on par with the previous quarter, and although there was a slight decrease in the rental rates for the area, investment certificates continued to be granted for projects and occupancy rates at the established parks remained high.

The serviced apartment sector retained high occupancy rates and even witnessed an increase in rents during the second quarter.

However, the oversupply of apartments in the city will influence the serviced-apartment market as more of this stock is converted.

There are about 10,000 new apartment units in Ha Noi and low absorption rates continue. However, developers are responding to the market conditions by changing the size of units and offering flexible payment terms, the report said.

In addition, new supply in this market will be curtailed in the medium term due to the residential development moratorium, suggesting that residential units for sale will remain stagnant in the second half of the year.

But, with improved lending conditions, this could provide encouraging signs towards the end of the year or beginning of the new year, according to Tizzard. —VNS