In the first quarter of the year, the capital city’s real estate market saw many positive signals, Leech said, including falling construction costs and a better outlook for supply during the rest of the year and into 2010.

Many construction projects have been resumed or sped up due to the dropping costs of construction materials and low interest rates.

Major projects, such as the Keangnam Landmark Tower, have already started to rise out of the ground, while the BIDV and Capital Tower office buildings have topped out and were being prepped for end-of-year launches.

Established downtown properties like Ha Noi Tower, Trang Tien Plaza, Vincom City Towers, Opera Business Centre and Pacific Place were all reporting full occupancy.

With the new office supply, rents have dropped and landlords have been competing to lock in large tenants.

CB Richard Ellis (CBRE) said that, with new supply from BIDV Tower looming, Grade-A rents ended the first quarter of 2009 down 8 per cent from the end of 2008, standing at US$49/sq.m. Meanwhile, asking rents for Grade-B office space had also dropped to under $33 per month in the first quarter.

Actual rents were likely even lower than asking rents as landlords applied promotion programmes to attract customers, Leech said.

While leasing activity remained slow in the first quarter, there had been strong interest in some new Grade-C buildings in Nguyen Phong Sac Street, he added.

Prices of residential real estate were dropping more precipitously, to the consternation of investors, with the asking price of units in mid- and high-end projects dropping anywhere from 4 to 30 per cent in the first quarter, with even more supply to come on the market later in the year.

Ha Noi’s residential-for-sale market has not seen the same level of growth as HCM City over the past two or three years, however, so CBRE did not expect to see as drastic a collapse in sales prices as HCM City has suffered.

The Sky City Towers on Ha Noi’s Lang Ha Street have come on the market with units priced at $2,100/sq.m, and the Golden Westlake also put its last units on the market at the end of the first quarter.

In the serviced-apartment market, over 400 new apartments came on the market, but the number of foreign tenants has fallen, so it has become difficult for landlords to get desired rents.

VietNamNet/VNS