Vacancy rates of both Grade A and B in Hanoi remain at below 2%.

Nhan Dan Online - The office rents in Hanoi have increased approximately by 50% within the past one year and will remain to be high because of small supply while ample new supply is two years away, according to real estate services firm CB Richard Ellis (CBRE) in its Hanoi real estate market second quarter 2008 update.

Specifically, rents for Grade A space averaged US$51 per square metre a month, a 9.8% increase from last quarter and 43.58% increase against the same period last year. Average rent for Grade B space was US$35 per square metre a month, an increase of 11% over the previous quarter and up 51% against the same period last year. Grade C rents have risen slightly and ranged between US$20-US$30 a square metre a month.

The occupancy rate for both grade A and B office space remain in the 98%-99% while the office sector saw relatively little Grade and Grade B space come online in the second quarter of 2008. Some companies have to use grade C office buildings or villas because of lack of supply and high rents.

The recent lack of liquidity in Vietnam has most severely affected Vietnamese real estate developers requiring construction loans and Vietnamese home buyers seeking mortgages to purchase a home.

On the residential buy-side, market sentiment is anticipating a contraction in prices and many home buyers are therefore taking a "wait and see" approach. This deferral of purchases in expectations that prices are likely to come down has added to the slowdown Hanoi is experiencing.

According to CBRE, certain sectors of the Hanoi real estate markets have cooled recently as a result of the lingering global economic slowdown, the inflationary environment in Vietnam and market illiquidity driven by high interest rates.

However, the market's medium-and long-term prospects remain strong in Hanoi and Vietnam's other major cities. In a sign of the market's underlying confidence in Hanoi's future prospects, especially in prime locations, prices for centrally located land plots have remained stable, while prices in non-central locations have softened from the first quarter of this year.

Thu Thin