Vietnam is the 13th most expensive office location in the world as demands have by far outpaced demands in recent times, according to the latest research by Cushman & Wakefield, a world leader in real estate services.
This ranking shows Vietnam has leaped four notches in just a short span of time, as this very company in its Office Space Across the World 2008 report early this month said Vietnam was the 17th most expensive office location. The earlier ranking was unveiled when the company launched its 31st Asia Pacific office in HCMC early this month.
The new ranking was announced Saturday on the occasion Cushman & Wakefield's board chairman John Cushman III visited HCMC.
The new research is shocking to enterprises, especially foreign investors because "such exorbitant office rent in Vietnam is not right with the economic conditions of a developing country like Vietnam," according to the company.
Toby Dodd, general director of Cushman & Wakefield Vietnam, said that despite tenants' unwillingness to pay, rental levels for prime office space are exceeding US$75 per square meter per month at present.
"Based on the current development, we expect no respite for the tight occupancy and Cushman & Wakefield forecasts further unsustainable rises in the current year of 2008," Toby Dodd says in the report.
If the rents for Grade-A office reach US$100 a square meter, HCMC will join Hong Kong, Tokyo and London in the list of Top Ten most expensive office locations in the world, according to the company.
Dodd noted that with the current economic conditions, the price of office space for lease in HCMC should be US$35-40 per square meter.
He said that real estate costs were adding to a plethora of operating costs which are eroding Vietnam's competitive edge.
"Our customers including multi-national companies are hesitating to invest in the country with the office space fee very expensive and not unshakeable, while other companies are operating in the country maybe delay their business expanding plans," he added.
At the meeting with reporters in HCMC last Saturday, the boss of the company John Cushman III also showed the worries about the country's capacity in attracting investment in the near future because the prices of office spaces are preventively high.
The country with young human resources as well as new and high-growth economy is a destination for foreign investors, especially international investors. However, Vietnam and HCMC need build a picture of competition, not bring a picture that service is very expensive, he said.
"Vietnam is becoming very expensive, investors will move to the countries that are more competitive like India or China," he warned.
Tenants with no options may be forced to pay unrealistic and unsustainable rents in the short term, but things will change after 2009, said Dodd.
"Nevertheless, a dramatic increase in new supply across all building grades from 2009 onwards will most likely see softening rental levels and restoration of sensible rents in a balanced market," he said.
* Cushman & Wakefield on the occasion of its board chairman's visit also announced last Saturday that it would expand its Vietnam operations with the launch of its Hanoi office next month.
"In the current uncertain global climate, Cushman & Wakefield is committed to growing its business in emerging markets like Vietnam to support our clients," said board chairman John Cushman III.
"We plan to aggressively expand our operations organically through growing and training young and Vietnamese staff while leading a new generation of real estate professionals," he said, adding "By the end of 2008 we expect to have a team of more than 50 professional staff across Vietnam."
This ranking shows Vietnam has leaped four notches in just a short span of time, as this very company in its Office Space Across the World 2008 report early this month said Vietnam was the 17th most expensive office location. The earlier ranking was unveiled when the company launched its 31st Asia Pacific office in HCMC early this month.
The new ranking was announced Saturday on the occasion Cushman & Wakefield's board chairman John Cushman III visited HCMC.
The new research is shocking to enterprises, especially foreign investors because "such exorbitant office rent in Vietnam is not right with the economic conditions of a developing country like Vietnam," according to the company.
Toby Dodd, general director of Cushman & Wakefield Vietnam, said that despite tenants' unwillingness to pay, rental levels for prime office space are exceeding US$75 per square meter per month at present.
"Based on the current development, we expect no respite for the tight occupancy and Cushman & Wakefield forecasts further unsustainable rises in the current year of 2008," Toby Dodd says in the report.
If the rents for Grade-A office reach US$100 a square meter, HCMC will join Hong Kong, Tokyo and London in the list of Top Ten most expensive office locations in the world, according to the company.
Dodd noted that with the current economic conditions, the price of office space for lease in HCMC should be US$35-40 per square meter.
He said that real estate costs were adding to a plethora of operating costs which are eroding Vietnam's competitive edge.
"Our customers including multi-national companies are hesitating to invest in the country with the office space fee very expensive and not unshakeable, while other companies are operating in the country maybe delay their business expanding plans," he added.
At the meeting with reporters in HCMC last Saturday, the boss of the company John Cushman III also showed the worries about the country's capacity in attracting investment in the near future because the prices of office spaces are preventively high.
The country with young human resources as well as new and high-growth economy is a destination for foreign investors, especially international investors. However, Vietnam and HCMC need build a picture of competition, not bring a picture that service is very expensive, he said.
"Vietnam is becoming very expensive, investors will move to the countries that are more competitive like India or China," he warned.
Tenants with no options may be forced to pay unrealistic and unsustainable rents in the short term, but things will change after 2009, said Dodd.
"Nevertheless, a dramatic increase in new supply across all building grades from 2009 onwards will most likely see softening rental levels and restoration of sensible rents in a balanced market," he said.
* Cushman & Wakefield on the occasion of its board chairman's visit also announced last Saturday that it would expand its Vietnam operations with the launch of its Hanoi office next month.
"In the current uncertain global climate, Cushman & Wakefield is committed to growing its business in emerging markets like Vietnam to support our clients," said board chairman John Cushman III.
"We plan to aggressively expand our operations organically through growing and training young and Vietnamese staff while leading a new generation of real estate professionals," he said, adding "By the end of 2008 we expect to have a team of more than 50 professional staff across Vietnam."
ed note: I've been following the growth and changes in Vietnam for sometime now. It was the main reason for this blog, to show the world, changes daily for now & the future in Vietnam.
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