Real Estate Report Vietnam Q3-2010

Share the info

Vietnam property rental rates fell by double digit rates through 2009 – in each of the three cities (Hanoi, Ho Chi Minh City and Da Nang) and across all three subsectors. Vacancy rates are generally running at around 30%.

Normally, in an economy that has been growing so quickly – that the authorities are tightening both fiscal and monetary policy in order to curb inflationary pressures – rents and capital values would fall until much of the vacant space is absorbed.

However, this is not the process of adjustment that is under way in Vietnam. The government has intervened to re-regulate the commercial Real Estate sector. Approvals for projects that have been proceeding slowly have been revoked. The aim of this measure may be to prevent/discourage speculation in a country where inflation has been rising. More likely, it is a move to curb supply at a time that rental rates are under downwards pressure.

It appears that rental rates will stabilize in the coming year and rise in 2011. For the time being, it has been assumed that this is what will happen because the government mandates it. To a certain extent, the government and its agencies will be able to increase the amount of office space (and, perhaps, industrial space) that they are occupying. However, the likely consequence is that vacancy rates will remain high. In essence, it appears that official policy will be to keep rental rates (and probably prices and capital values) above market-clearing levels.

Learn about real estate in Vietnam at Vietnam Real Estate Report Q3-2010

Contact us to schedule your complimentary consultation.

We are available at offices in central of Hanoi, Ho Chi Minh City and Da Nang that help cover through out Vietnam.