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Vietnam facing office property crisis as supply outstrips demand

Belt tightening due to the global economic downturn is also having an effect, according to forecasts from various international analysts.

Global real estate companies Cushman & Wakefield, Savills and CB Richard Ellis said top quality office space rents have fallen from a peak at the beginning of last year of $70 per square metre to $43 this year and could go as low as $30.

Rents for second-class space have fallen from about $45 per square metre to $28 to $40 and third-class office space from $39 to $14 to $25.

CB Richard Ellis managing director Marc Townsend said office demand is closely linked with employment and financial stability and firms were tightening their belts, cutting jobs and also cutting costs on office rents.

The deteriorating situation is compounded by an increase in vacancies and 1.25 million square metre of new office space predicted to come into the market this year, adding to the downward pressure on rents.

Savills said that construction in the south has slowed significantly with only 930,000 square metre of office space under construction till 2012.

Vinaconex Investment and Tourism Joint Stock Company general director Tran Ngoc Quang said the office investment market is gloomy and a recovery is difficult to forecast in light of the financial crisis.