Vietnam's sinking office market prices alone in Asia: CBRE

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While office markets across Asia awaken from the global economic crisis, prices in Vietnam continue to drop, real estate services company CB Richard Ellis said in a new report.

"The market movement that has been seen in Vietnam is in contrast to that witnessed elsewhere in Asia," said Nick Axford, Head of Research for the Asia Pacific.

"Growing supply, coupled with a softening in demand throughout 2011 has put downwards pressure on rents," he said.

On the contrary, other Asian real estate markets continue to outperform their European and American rivals as the slow and long recovery from the global financial crisis continues.

Office rental levels in the Asia Pacific region increased by 13.47 percent year-on-year at the end of the second quarter, compared to 2.38 percent in Europe, Middle East and Africa and just in 1.51 percent in North and South America, CBRE said.

"We continue to see occupier demand for the major markets in Asia, as organizations seek to benefit from the continued strength of the region's economies," Axford said.

CBRE also noted that Vietnam's institutional investment is still in its formative stage although there has been notable activity in both HCMC and Hanoi over the past 18 months.

Adam Bury, Head of Research and Consulting for CBRE in HCMC said, institutional investors in Asia have typically been looking to acquire prime buildings in core economic markets.

"With the Vietnamese economy still developing and stabilizing, and the number of prime assets, of institutional quality, limited, it is apparent that some investors may shun the country," Bury said. "This said, with economic liberalization continuing and the quality of developments continuing to increase, we expect there to be a slow and steady expansion in investment transaction activity within the market over the coming years".

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