Ho Chi Minh City office buildings find few takers despite rent cuts

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A vacant building in Ho Chi Minh City has a restaurant in front after failing to find tenants Photo by Dinh Son

A building that formerly housed a post office in downtown Ho Chi Minh City has been unoccupiedfor more than a year.

There is just a small restaurant in front of the building on Nguyen Dinh Chieu Street, District 3, which is run by the building security guard who gets the space free in place of a salary.

An office building on Ung Van Khiem Street, Binh Thanh District, had to be converted into rooms of 15-25 square meters to rent out to students and low-income workers at around VND3 million a month.

The owner of a building on Cong Quynh Street, District 1, said it has been available for rent since early last year, but found no tenants. Many consider his price of VND500 million for an 11-story building too expensive, he said.

A building on Cong Hoa Street, Tan Binh District, has been vacant after companies renting it went bankrupt. Many of them have left desks and chairs in lieu of rent.

Property consultancy Savills Vietnam said the leasing market is depressed since many businesses have gone bankrupt or cannot afford the rent.

Truong An Duong, head of research at Savills, said 12,900 square meters of space have been vacated by business establishments or switched to less profitable usages during the first quarter this year.

But around 1.3 million square meters of space would enter the market soon, he said.

Savills said rents have fallen by 2 percent this year, but many building owners said they cut prices by more than half in the last few years.

Nguyen Thi Nhi, deputy director of Dong Han Investment and Development Company, which owns the 16,000-square-meter Mirae Business Center on To Hien Thanh Street, District 10, said the company managed to lease out all the space at US$20 per meter in 2008.

Now it has cut the rent to around $8 per square meter for the first year, and $10 for subsequent years, provides free interior decorations and two months rent waiver for big customers.

But despite all this it has managed to lease out only 75 percent of the space, Nhi said.

The owner of a luxury building on Le Dai Hanh Street in the same district also said the rent has almost halved to $13 for the first year and $18 subsequently.

But the landlords said many companies take advantage of the policy and move out after one year.

Neil MacGregor, managing director of Savills Vietnam, said investors with deep pockets can choose this difficult time to enter the market since there are many offers of sale, including of the five-star Mövenpick Saigon hotel, which wants to sell 70 percent, and an international housing project of 31,000 square meters in District 9.

Earlier Legend Saigon hotel was bought by Korea's Lotte and renamed as Lotte Legend Saigon.

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