Recession and the serious damages caused by the Covid-19 pandemic are serious threats to the owners of office buildings for lease.

When Keangnam Landmark 72 opened in Hanoi, the market was witnessing an oversupply. It took the investor a long time to fill up the vacancies.

To build the tower, the owner, Keangnam Enterprises, had to borrow a large amount of money. The total loans by 2012 reached 600 billion won, or $510 million.

AON Holdings was believed to pay 450 billion won to buy the debt. After settling debts, it will have the right to control the tallest building in Vietnam.

Another financial tower project of a bank in the Ciputra urban area also has to undergo restructuring. The bank wants to transfer all the assets of the project and later lease back the 68-storey tower for its head office.

The project has a 48-storey and 68-storey tower in Tay Ho district in Hanoi. Total investment capital was VND10.267 trillion.

Meanwhile, many other projects are still on paper. PVN Tower, expected to be the tallest tower in Vietnam with 102 stories, is one.

Construction was scheduled to be completed by 2014. However, in March 2011, PVC stated that PVN Tower would have 79 stories instead of 102 as initially designed.

In 2012, PetroVietnam decided to withdraw from the project per the request by the state to divest from real estate projects.

Many other smaller office towers have been left idle for many years. The 31-storey Vicem Tower, with basic construction items completed, has made no progress for the last 10 years.

Saigon One Tower, the third tallest building in HCM City, a twin tower with five basements and 41 stories, has been left idle in the central area of the city for four years. Construction was suspended because of a lack of capital.

Office buildings are facing an oversupply caused by the pandemic. According to CBRE, if the pandemic ends by the end of the year, the rent will decrease by 8-10 percent under the worst scenario as tenants continue to take a loss and ask building owners to slash rents.

The vacancy rate is predicted to be higher than the previously predicted rate, as over 270,000 square meters of office area will be launched into the market.

After a quiet period, the race to build financial towers kicked off again with Sunshine Empire, 108-storey financial tower, and Empire 88 Tower in Thu Thiem under construction in HCM City. 

Anh Duy

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