Foreign Firms Pushing up Office Rent in HCM City
Office rental in Ho Chi Minh City is expected to increase over the next three years due to a shortage of commercial working space, said Peter Dining, a real estate expert based in the economic hub in southern Vietnam.
"The average rental fees will reach $35 per sq m per month in 2008, against the current rent of $24," he said, adding that the rental will drop after 2008 if pending office building projects are completed as planned.
Many companies have had difficulty finding offices to lease because of unfinished construction projects and a lack of office vacancies. Over the last few years, no office buildings have been completed and not a single construction project has been kicked off.
Foreign enterprises, the main investors in the office building market, made no plans to construct office space after the regional financial crisis in 1997, which pushed down the office space rent to $14.7 per sq m per month in 1999. The rent rose to $20 in 2003 but was still far from matching expectation.
E-Town, the office building owned by listed REE Co., has leased 98% of its total area of 35,000 sq m at an average rent of $11 per sq m per month after two years of operation.
The Bitexco Office Building, the second largest office building in Ho Chi Minh City, has been leased after nine months of operation from mid 2003 at an average rent of $16-22 per sq m per month.
Other office buildings, including Sunway Tower, Metropolitan, Saigon Center, Saigon Tower and Harbor View Building, have reached record high occupancy rates at 90-95%.
Tran Thi Anh Thu, managing director of E-Town, said the current demand for office buildings is due mainly to foreign enterprises and companies from outside of Ho Chi Minh City opening representative offices. (VNS Feb 14 p16)
A series of festive activities and attractive domestic tours lured a great amount of foreigners to Vietnam during the traditional Lunar New Year (Tet), falling on February 8-11, national travel companies reported.
According to unofficial statistics, the figure for the festival this year, the Year of Rooster is expected to post a huge surge over the same period last year although it does not count returning overseas Vietnamese, who are expected to total 100,000.
The Vietnam National Administration of Tourism (VNAT) revealed that the hospitality sectors in almost all cities and provinces nationwide have earned the most-ever lucrative period.
In the first five days of Tet, Ho Chi Minh City alone welcomed around 17,000 international visitors, largely up over the same period last year.
On February 11 (the third day of the new lunar year), Seaburn Sdirit vessel from the Bahamas and the Peace Boat with 200 and 940 passengers on board docked at central tourism hub of Danang City, marking the first tourism delegations to the country by ships.
In the capital city of Hanoi, almost all hotels reported a high rate of occupancy, representing an increase of 20% on-year. The five-star Sofitel Metropole Hanoi hotel revealed that 95% of its rooms have been booked from the end of January to May.
Particularly, the strong attraction of the "Central Heritage Road" made transport system to the region, home to four out of five World Heritage Sites in Vietnam, overloaded.
Although the national flag carriers Vietnam Airlines and the Pacific Airlines increased the number of flights and even put extra planes on the Ho Chi Minh City-Danang route, some tour operators said they lost passengers because of shortage of airline tickets to the region.
Contrary to the rise of in-bound tourists, the number of out-bound visitors this year has posted a great reduction of 50-60% on-year. In spite of special discount programs, tours to regional nations including Thailand and Malaysia lured very few clients.
The move allegedly resulted from the severe consequences of the Asian Tsunami, which hit the region in late December.
In 2005, Vietnam plans to receive 3.2 million foreign visitors and to serve 15 million domestic tourists in 2005, a year-on-year increase of 14% and 10.5%, respectively. It also aims to earn a revenue of VND30 trillion ($1.91 billion), a 15% increase over 2004. (Pioneer Feb 14 p15, VNS Feb 14 p3, Capital Security Feb 14 p5)