VietNamNet Bridge – The office-for-rent market has tumbled down with tenants having packed up and gone, landlords struggling to collect debts.

The market pale

The owner of an office building in Cau Giay district said he has driven out a tenant who was 5 months in arrears with his rent, worth hundreds of millions of dong.

The tenant was a loyal client, who signed a contract on leasing the office for five years. Because of the bad business performance, the tenant could not pay the rents.

The landlord said that he only made such a decision after five months of failing to collect debt from the client, and that there are “numerous” clients who cannot pay rents on schedule.

The director of a private company said he has decided to relocate his head office to the suburb area, where the rents are lower.

One year ago, he moved into a 100 square meter office in an A-class building, hoping that the high-end office would help polish the company’s image.

“The rents and the conditions sounded very reasonable,” he said, explaining why he chose an A-class office. “Besides, the landlord also offered very attractive preferences.”

However, the high end office could not help develop the business. The director had to pack up and go after one year of staying there.

A lot of landlords have complained about the debt payment delays in the context of the economic downturn. As the business has been going downhill rapidly, tenants cannot pay their rents.

“You should feel happy if the clients still can pay, though with the delays,” the above said landlord in Cau Giay district said, adding that it is very difficult to find tenants at this moment.

“Start-ups tend to set up business in the suburb areas, where they have to pay lower for rents. Many of them set up their offices at their homes, or ask their staff working from home,” he said.

The owner of a building in Tu Liem district has revealed that he has to receive rents from a client in consumer goods instead of cash.

Meanwhile, another tenant, a media company, has promised to provide the landlord an advertisement service package worth VND500 million within a year, instead of paying rents.

The flexible payment method has also been accepted by a landlord in Trung Hoa Nhan Chinh area. A real estate firm has asked the landlord to exchange the rents for a land plot it owns. As the land plot is worth VND1 billion, the real estate firm would be able to keep the office there for one more year.

Market has not bottomed out yet

The quiet market has forced landlords to lower the rents to attract more clients. The representative of a real estate firm which acted as a distributor, said that foreign companies or big businesses always can enjoy preferential rents, because their fames would help lure more clients.

He said that the special clients can save up to 20 percent of the total rents, depending on their fames, leased areas and durations.

CBRE Vietnam has said that the market has not bottomed out yet, and that the Hanoi market would see the B-class office rents decrease further in 2014.

Duy Anh