Hanoi (VNS/VNA) - The Hanoi office market fared relatively well in the firstquarter this year despite the COVID-19 pandemic, according to CBRE Vietnam.

In thefirst quarter, total office supply in Hanoi was around 1,380,000 sq.m,unchanged compared to the fourth quarter in 2019 because there were no newlycompleted projects.

Bothaverage asking rent of Grade A and Grade B buildings remained stable comparedto previous quarter, at 26.2 USD and 14.3 USD per sq.m per month, respectively,excluding value added tax (VAT) and service charge.

In termsof vacancy rates, both grades stayed at healthy levels of below 10 percent.Grade A’s vacancy rate reached 6.4 percent, dropping by 2.9 percentage points(ppts) year-on-year while Grade B vacancy lowered to 8.8 percent, down by 0.5ppts year-on-year.

Althoughnot as heavily impacted as other sectors, the office sector started to observesome early impacts from the pandemic, according to CBRE.

Currenttenants are requesting landlords to reduce rent by 20-50 percent due to theirworse business performance during the pandemic, said Do Van Anh, CBRE Vietnammanager.

Askingrents have yet been adjusted, but certain Grade B buildings have applieddiscounts from 20-30 percent for their tenants from three months to end of2020. Other supports, such as extending the payment schedule, are also applied,she said.

Moreover,most of the office leasing transactions in the first quarter were postponed orcancelled due to capital constraints and travel restrictions. Therefore, thetotal net absorption of Hanoi office market was only 8,900 sq.m in the firstquarter.

This wasthe lowest absorption rate recorded since the second quarter of 2013, accordingto CBRE Vietnam.

Duringthe period 2017-19, the banking, finance, insurance and information technologysectors had the highest demand on leasing office to expand branches, Van Anhsaid. However, at present with the COVID-19 pandemic, they must consider theirbusiness strategy, so they delay the leasing of offices to open branches.

In thelast three quarters of 2020, the market will heavily depend on the pandemic. Incase COVID-19 could be contained within the second quarter of this year,performance would not be significantly affected, as most of the delayed dealsin the first quarter would be restarted.

In casethe pandemic extends to the end of September 2020, rents of both grades areexpected to drop by 5-10 percent, while vacancies are expected to increase by5-15 percent due to the resizing and closing of tenants’ offices.

Accordingto CBRE, the outbreak of COVID-19 could reshape the office sector. Tenantswould focus more on the agility of the office to adapt to unexpected changes inthe business environment.

Landlordsalso need to apply new technology and new procedures to protect the wellbeingof people working inside the building.

Thoughsuffering under the pandemic, the Hanoi property market expects to have newlaunches of 126,000 sq.m of offices for this year. Some large office supplyprojects on the Hanoi real estate market are under construction to complete atthe end this year as scheduled, including Capital Place in Ba Dinh district andThai Building in Cau Giay district, Van Anh said./.