FCG Vietnam, a software outsourcing company has been looking to lease 7,000 sq m for a year. At last, it has decided to lease the 3,000 sq m building on Ly Chinh Thang street, district 3, and the 10-storey building on Nguyen Trai street, district 5.

The company will have to spend a lot more money to decorate the two buildings to make it easier for management. FCG Vietnam’s Director General Ngo Hung Phuong is still not satisfied with the two buildings; however, he cannot find anything better.

Mr Phuong said that the existence of the two offices will force the company to pay more for management fees. Moreover, neither of the two buildings are located in advantageous positions: one is situated on the one-way street Ly Chinh Thang, while the other in district 5 is surrounded by a series of fashion and consumer shops.

In fact, investors now cannot find any empty space to lease. Real estate consultancy companies said they cannot fulfil the orders by clients for offices. The supply of offices has become short, while the demand is increasing, and new buildings will only become operational after three or four years.

Real estate consultancy companies said that the office shortage will last for at least several more years. A recent survey released by Chesterton Petty Vietnam showed that there was only 350,000 operational sq m of office, which is widely considered too small for a big economic centre like HCM City.

A sq m of office may be offered at $38/sq m in the next year, even higher than the current levels in central areas in Singapore, at $34/sq m, Mr Ashton said.

Many investors, unable to wait until they can find offices to lease, have had to build offices themselves. Manulife insurance has signed a contract on leasing 7,000 s qm of land to build its offices in the Phu My Hung urban area, where it will move after leaving the Diamond Plaza in two years. Similarly, Unilever will also leave Central Plaza to set up offices in a building with 10,000 sq m of space.

Nothing can bring more lucrative deals than investing in office buildings. Mr Ashton said that the demand for offices is increasingly high, especially from domestic companies which tend to want first-class offices.

In fact, all office buildings are occupied, even those that are still under construction. Vietcombank Tower in district 1 is an example. The 77,000 sq m project will only be put into operation in 2009, but the project investor, the Vietcombank – Bonday – Ben Thanh Joint Venture believes that the building will have a high occupancy rate. Vietcombank, the strategic client, will lease at least 20% of the total area, while a trade group and an international university plan to lease several thousand sq m.

The office building owned by Sacombank on Nam Ky Khoi Nghia street, which will put 20,000 sq m of area into operation early next year, has also found its first clients.

Buildings that are located some distance from the city’s centre can also enjoy many clients. Three office buildings invested in by Phu My Hung (Broadway 1, Broadway 2 and Lawrence Ting) in the Nam Saigon urban area are full. Other projects are under construction there, including Saigon Paragon tower invested in by Kim Cuong Company, and the office buildings of Nam Long and Holcim will become operational in the next year.

In the north western area of the city, the E-Town 1 building on Cong Hoa street (Tan Binh district) has leased 26,000 sq m, while E-Town 2 with 27,000 sq m of space area will be put into operation next year. It is estimated that tens of office building projects are under construction now in HCM City.

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